Genius Budget - all dollars and no sense
In a commendable move towards better governance, Government sent the fiscal expenditure and revenue estimates to Parliament in mid-February.
Everything's good about this new development. It allows more participation, time for adjustments, and improves the debate's relevance to real-time spending. But, that's where the good news ends. The actual estimates tabled on Thursday are all bad news.
"We cannot borrow our way out of our problems."
Who said that in January 2011?
"Reducing the debt means we cannot borrow anymore money, and that means that you have to find a way to live within the available resources."
Who said that in August 2013?
Me, Teacher! Me, Teacher! It was Finance Minister Peter Phillips. Now, that same minister has tabled expenditure estimates of $642 billion (up 19% from $539.4 billion last year) and taxes/grants (income) of $577 billion. Obviously, Government lives in a fantasyland where Jamaican citizens are all rich tax evaders. Me, I'm with Reb Teyve:
"[soliloquy] Dear Lord, you made many, many poor people. I realise, of course, that it's no shame to be poor.
But it's no great honour either!
So, what would have been so terrible
if I had a small fortune?
"[bursts into song]If I were a rich man,
(yubby dibby dibby dibby dibby dibby dibby dum}
all day long I'd biddy-biddy bum
if I were a wealthy man.
I wouldn't have to work hard.
(yubby dibby dibby dibby dibby dibby dibby dum)
if I were a biddy- biddy rich,
Where's this $65-billion surplus spending to come from? Either:
1. Government intends to borrow another $65 billion; or
2. It's an election year and Government is playing the usual now-you-see-it-now-you-don't trick which will only be exposed by supplementary estimates AFTER the local government elections.
I'm truly tired (not to mention sick) of these political games. I heard Peter Phillips describe capital expenditure estimates as "flat", but last year's recurrent budget was $404.6 billion, leaving $134.8 billion as estimated capital expenditure (source: Scotia Investments Economic Update, April 4, 2014). Seventy-one billion dollars more doesn't sound "flat" to me.
Don't get me wrong, I'm a big fan of increased capital expenditure. I just won't believe it until I see it. So the $65-billion hole in the Budget concerns me deeply because, if it isn't to come from borrowing and if the expenditure is to be taken as "real" for the first time in decades, it means additional taxes. This will kill Jamaica's spirit. We'd pay for capital development if we could. But, first:
"I'd build a big tall house with rooms by the dozen
right in the middle of the town.
A fine tin roof with real wooden floors below.
There would be one long staircase just going up
and one even longer coming down
and one more leading nowhere, just for show."
But, these days, only politicians seem capable of building mansions. The rest of us must suck salt through a wooden spoon.
And the wooden spoon's density index is rising. Year 2014-15 collections seem sure to fall at least $10 billion short of original estimates of $377.6 billion (out of total taxes/grants projected of $421.2 billion). That projected tax intake was 9.8% above 2013-14's out-turn and represented 23.4% of GDP. Despite these clearest of indicators, Jamaica is overtaxed, we're expected, in 2015-16, to pay an 'estimated' $443 billion in taxes (out of total projected taxes/grants of $577 billion) or $75 BILLION MORE than we paid last year. This 'estimate' is 20% more than last year's out-turn and more than 30% of GDP. Oy, vey!
"If I were a rich man, ...
I'd see my wife, my Golde, looking like a rich man's wife,
with a proper double chin,
supervising meals to her heart's delight.
I see her putting on airs and strutting like a peacock.
Oh, what a happy mood she's in,
screaming at the servants, day and night!"
SEVENTY-FIVE BILLION DOLLARS MORE tax to be paid? Seriously? Of that frightening amount, Peter Phillips has said "only" $8 billion of new taxes will be levied and the rest collected through increased compliance. But that's just a word game because whether it's called "new taxes" or "greater compliance", the bottom line is, if these estimates are to be believed, we're asked to pay $75 BILLION MORE taxes next fiscal year than we were able to pay last year. This on top of more than $20 billion in new tax packages in the last two years and another $8 billion new tax package to come. This is sheer lunacy.
This Budget is already a bad joke. Surely, nobody believes these numbers? This "no-more-borrowing" Government borrowed US$800 million in July 2014, much of which it used to defend a false exchange rate. I wrote then ('Why Westminster won't work', Gleaner, August 24):
"Jesus H Christ on a Japanese crutch! Government is again borrowing from Peter to pay Paul. Items (i) and (ii) translate from gobbledygook to repaying previous loans (aka kicking the can down the road). Item (iii) sounds like leftovers will fund the official scam of falsifying the exchange rate until next election."
Guess what? On July 1, 2014, the exchange rate was J$112.26 to US$1. It remained under $113/1 until November 11, 2014. Since then, it touched $114/1 on December 10 (less than a month) and $115/1 on January 13, 2015 (another month). The falsely depressed exchange rate didn't even make it to the next election. Wha' happen? Did the borrowed money run out?
So, we're about to borrow another J$65 billion to close a budget gap that has to be a prank because I'll bet dollars to donuts the promised capital expenditure never materialises.
Peter Phillips has repeatedly said Government's objective is to reduce debt and, again on Thursday, I heard him say this Budget will help us reduce debt. What's the reality? In January 2012, Jamaica's internal debt totalled $888.5 billion. External debt was US$6.4 billion. By September 2014, internal debt was $1.04 TRILLION and external debt was US$7.2 billion. That's an increase of 17% (internal) and 12.5% (external), thanks to IMF austerity and our borrow-more/tax-more policy. We MUST be rich! I wish.
"Lord, who made the lion and the lamb,
you decreed I should be what I am.
Would it spoil some vast eternal plan
if I were a wealthy man?"
One of the finest Broadway musicals ever written was Fiddler on the Roof (music by Jerry Bock; lyrics, Sheldon Harnick). It told the story of Jewish persecution by and eventual exile from Russia in 1905 (also a subplot in the current season of fantastic TV drama, Downton Abbey). The movie featured the debut of hitherto-unknown Topol, whose performance as Reb Tevye, a poor milkman living in Anatevka, a small Russian village, with five daughters and a lame horse, was epic. Reb Teyve successfully arranged a suitable marriage for his eldest, Tzeitel, to the town's butcher (a rich but unattractive widower), but Tzeitel defied tradition and fell in love with a poor tailor. Can you imagine? A TAILOR? Tevye has more important things to worry about than politics. Oy, vey!
I first heard If I Were a Rich Man in 1967 when it was covered by top-class Australian entertainer, Rolf Harris, whose weekly TV variety show featured a very creative segment where he'd sing to a group of children. He'd begin in front of a blank wall holding a can of house paint and a brush. By the time the song was finished, he'd painted a caricature of the song on the wall. Brilliant! To my chagrin, Rolf Harris, one of my childhood heroes, was recently convicted in Australia of paedophilia. Oy, vey!
Peter Phillips "expects" Jamaica's debt-GDP ratio to be 139% by March 31, 2015 (down from 147% on May 1, 2013), but since GDP has been on the decline or showing anaemic increase for the period, I can't comprehend what he sees through the roseate chimera of a cloud of optimism.
So, it's onward ever to the annual charade (aka Budget 'Debate'). Taxpaying spectators will experience the thrill of PNP MPs banging on desks and unanimously passing this Budget joke. We'll continue to wish for wealth but kept poor so we can be loved.
Meanwhile, Jamaica will incur more debt. A bloated public service will continue to devour Jamaica's income. We'll pay more taxes. Kidney patients won't access dialysis; asthmatics won't be ventilated; children will fail maths/English in droves; police will kill more citizens; crime will be unrestrained; our 'roads' will destroy our cars. Just another year in Paradise!
Peace and love.
- Gordon Robinson is an attorney-at-law. Email feedback to firstname.lastname@example.org.