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Devon Dick | ‘Mea Culpa’ Budget Does Not Add Up

Published:Thursday | May 19, 2016 | 5:00 AM

The Minister of Finance's Budget presentation last Thursday provided useful information such as 11 per cent of Jamaicans borrowing money from financial institutions while 78 per cent have financial accounts and our economic situation being of 'extreme inequality'.

Some important things were missing from the document, including no 'mea culpa'. The promise was all workers who earn $1.5m or less would pay no income tax and that no new taxes would be necessary to fund it. Finally, it would start April 1. The reports show those promises have not been delivered so persons responsible for designing the original plan should offer a 'mea culpa'.

In addition, the original proposal was abandoned as the Minister of Finance referenced the International Monetary Fund (IMF) approval for wanting a plan that addressed issues of 'fairness, equity, transparency, non-distortion, simplicity and that the revenue loss would be replaced by recurring revenues'. Did we need the IMF to tell us that?

The person or persons who misled the JLP should not be involved in giving economic advice because those mistakes demonstrate grave and dangerous incompetence. It does not appear that the $1.5m plan was based on research, therefore, the minister of finance had to quote a March 2016 article from former Prime Minister Bruce Golding which showed that $1.32m would be justified based on inflation from 1980. It would be far better to have Golding as an economic adviser.

 

INSULTING

 

Furthermore, to renege on the promise of no new taxes without saying 'mea culpa' is insulting. Any Tom, Dick or Harry can give a tax relief and then impose more than enough new taxes on the same people. The skill would be to do it without new taxes as promised.

It gets worse, in that most new taxes have been increased immediately and all before the tax relief. In other words, for some two months, until July, higher taxes have to be paid by all Jamaicans. At very minimum, the benefit should be simultaneous with the new taxes.

And the new taxes on the citizens could be avoided. The JLP criticised the hedge fund against oil prices increases but will continue with it. It is better to say if the oil prices rise to above US$45 a barrel then the $7 gas tax will be implemented. We can roll back the gas tax.

 

INCREASE ROOM TAX

 

Additionally, instead of the other new taxes on the population, the Government should increase the room tax on hotels, which means that mainly tourists would pay for the relief. There are approximately 28,000 hotel rooms and we could increase the 20,000 large hotel room tax by US$2 from US$4. If a tourist normally pays US$175 for a room, he or she will not squeal for US$177. Smaller hotels can move by US$1 and we will earn at least US$14m, which is more than the $13.8b tax package.

In Brazil, there is impeachment process against the president because it is alleged that she gave inaccurate budget figures. What would happen to Jamaican politicians if accuracy and truth were legally expected? Over a decade ago, I wrote that a People's National Party minister of government should resign because I felt that in Parliament he gave the impression that minimum wage earners were getting more than actual.

'Mea culpa' means persons have faced the truth that the original promise was not kept and have taken full responsibility for the missteps, misleading statements and express regret and acknowledge fault as it relates to the $1.5m by April 1 and no new taxes. Nobody is perfect and the correct thing to do is apologise so that trust can be regained.

- Rev Devon Dick is pastor of the Boulevard Baptist Church in St Andrew. He is author of 'The Cross and the Machete', and 'Rebellion to Riot'. Send feedback to columns@ gleanerjm.com.