Paul Ward | Nigel Clarke’s narrative on poverty skewed
In his attempt to rebuff the criticism arising from the recent poverty data, Nigel Clarke shows that despite his economic credentials, he has a lot to learn, including being less arrogant.
The apparent broad message of his defence is that a drop in poverty of 0.1% in rural areas is the extent of the prosperity thus far achieved after three and a half years of the Holness administration. And yet even this is driven not by any improvement in the local economy but by foreign remittances, according to Clarke’s analysis. Overall, poverty has risen in Jamaica because overall remittances are down, he says, which is hardly surprising given the hard times faced by the diaspora in both the USA and the UK.
Perhaps worse than this admission of the Government’s (and previous administrations’) impotence is the replay, this time even stronger, of Omar Davies’ admission that the two gangs of Gordon House spend wildly in the run-up to elections, buying elections even more literally than with false promises. Nigel Clarke may come to regret his politically naive honesty.
Then the $1.5-million carrot and indirect taxes. Clarke seems to be saying that three quarters of the working population benefited from the $1.5m income tax threshold. Based on Audley Shaw’s contention that 251,000 persons would benefit, this makes the working population a mere 335,000, which casts serious doubt on the supposed single-digit unemployment rate that we are told now exists.
Clarke also argues that those not benefiting from the tax break did not lose out because core inflation remained low. This seems incorrect economic analysis to me.
People spending money faced 5.2% inflation (the headline rate) at least partly triggered by the GCT increase. So those not benefiting from the rise in the income tax threshold to $1.5 million did indeed lose out, effectively paying for a dishonest or disingenuous election promise. Indirect taxes are, and always will be, regressive, burdening the poor more than those better off.
As for Clarke boasting about increases in PATH payments, I always find this depressing. Sure, the poor need and welcome this support (much recommended by the International Monetary Fund (IMF) to fend off revolution), but what an admission, again, by successive governments!
After 57 years of in-dependence (no, not a typo), a large proportion of the population have to rely on handouts. It is demeaning to our national psyche and, possibly, to many who receive it.
What is more, I understood that in Jamaica, poverty rates are based on household consumption, not income, which invalidates Clarke’s contention that these handouts partly cancel out other losses in real income.
Finally, Clarke speaks about improved and broadened tax revenues being available for spending on deep structural issues, including poverty and policing. So taxes are taken from the poor (those below the $1.5m) and then given back to some extent as PATH payments and the hospitality offered in the now semi-permanent state of emergency holding areas.
Nigel Clarke needs to be careful that the praise by the IMF for his financial orthodoxy (i.e., austerity) does not go to his head. His friends, the bankers, may be doing well (NCB, Sagicor and JMMB recently announcing record profits), but a majority of those voting at the next election may not see it, or feel it, in the same way.