Sat | Nov 25, 2017

Ian Boyne | ‘Tax-perity’, prosperity or reality?

Published:Sunday | May 22, 2016 | 12:00 AM
Ian Boyne
Opposition Leader Portia Simpson Miller greets Minister of Finance Audley Shaw before ripping into his $580-billion Budget in Parliament last Thursday.
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The big guns of the People's National Party (PNP) were out in full force last week in the Budget Debate, but when the firing was over, there was really no blood on the floor. The firing was more celebratory, a "Pram! Pram!" to their last four years in office, rather than primarily a direct aim at the Jamaica Labour Party's (JLP) Budget.

Times have changed. The sharp ideological and policy divisions that used to exist between the two parties have disappeared. A staunch Comrade today can't really tell you why, fundamentally, he is different from a diehard Labourite. Aside from sheer party loyalty, attachment to a personality or party history.

This has been most evident in this Budget presentation - hardly a debate. The only critical difference that has emerged concerns the arguments back and forth over the tax proposals, and the PNP is not really saying it is opposed to giving a tax break in principle. It is just parading itself as a more purist capitalist party than the JLP. The irony of Portia Simpson Miller - not just any PNP leader - chastising the JLP for being "populist" was stirring.

The Budget presentations of both Opposition Leader Simpson Miller and Opposition Finance Spokesman Peter Philips were largely self-justificatory. And appropriately so, I believe.

They both demonstrated, with empirical data and not propaganda, that their stewardship of the economy over the last four years was sober, responsible and disciplined. Peter was especially potent in proving the case. He showed where Jamaica was coming from and how the last PNP administration took bold steps to correct our missteps. Those missteps were not just because of the fault of the JLP administration preceding this one. We had been on an unsustainable path for decades.

I reject the PNP propaganda line about "the four missing years", in reference to the Golding years. Fortunately, neither Portia nor Peter came back with that canard in their Budget presentations. Golding had taken over months before the worst recession since the 1930s and, therefore, the PNP critique of those years has been disingenuous.

 

PIVOTAL CHANGES

 

But nothing must take away from the pivotal changes made by the PNP, and from the courage of the leadership of both Peter and Portia. Credit must be given to Portia, particularly, for she had been projected as a reckless populist, carried away with her 'excessive' devotion to the poor. Some in the private sector felt that Peter Phillips would be a stickler for fiscal discipline, and that he would have to drag her kicking and screaming to stick with the International Monetary Fund (IMF) programme.

But Portia was in every way in sync with the fiscal reforms and did not go on any populist frolic. She must be given credit. "We were bold. We were brave ... . We on this side were united in the view that the Jamaican people would have no real prospect of progress if we did not drastically reduce the debt. For decades it had hung like a millstone around our necks," she said last Thursday. "I stand before this Parliament and the nation to remind you that my administration was bold enough to take the difficult challenges that successive governments had shied away from for decades."

Continuing, she said with full accuracy and potency: "Our Government has done the heavy lifting." She went on to celebrate further: "For the first time in decades, Jamaica had a balanced Budget and a healthy primary surplus."

We undersell ourselves in Jamaica because of our blinding partisanship and tribalism. The fact is that our political parties have demonstrated great maturity. Neither is fiscally reckless, dangerously populist or giddy-headed. There is consensus between our parties that our debt albatross has to be dealt with as a priority and that running up large deficits is inadvisable and unsustainable. Both are interested in the poor, but both understand there is a limit to what can be done for them if we have no firm economic foundation. Redistributing poverty is not a wise policy decision. And you can't distribute what you don't have, as Michael Manley learned painfully in the late 1970s.

 

MORE MELODY

 

If you heard Audley Shaw and both Portia Simpson Miller and Peter Phillips, you would see significant consensus. I am sure Andrew Holness will merely add some more melody to the chorus when he chimes in this Tuesday. We have come a far way.

The very reason why Portia and Peter spent so much time attacking Audley for "giving with an open hand and taking back with two" was that this Government is also committed to fiscal prudence and austerity.

Audley was very clear in his Budget presentation, where he made that startling revelation that the IMF was invited into a Cabinet meeting to discuss crucial tax issues. "We also took under advisement what the IMF had to say about the ($1.5-million) plan. They were concerned with ensuring that any plan addresses the issues of fairness, equity, transparency, simplicity, uniformity and that the revenue loss would be replaced by recurring revenues." Note those last few words.

Even if the JLP wanted to go 'populist' by giving without getting back anything, the IMF would not allow it. The JLP's hands were tied. They had no choice but to impose taxes if they were to show any semblance of keeping the election promise. Listen to Audley carefully: "We consider the IMF's input into the design of the tax plan to be immensely important. We took on board and incorporated into the tax plan everything the IMF required." I had been writing for years that the IMF is more influential on public policy than any government we choose.

The PNP lost because it could offer no goodies under the IMF programme. It feels cheated that while it could offer nothing to the electorate, the JLP proposed something and then won the election and has now deferred its full implementation for a year. Lucky JLP. Life's unfair.

So while Peter Phillips was mentioning several crucial areas where there were Budget cuts, Audley had to cut his cloth to fit the IMF straitjacket.

Hear Audley again: "We, the Jamaica Labour Party, are quite mindful of the 7% primary surplus target and are committed to it and the other structural benchmarks. We have indicated this to our multilateral partners when we visited Washington in April, so whatever we do we are mindful of this." Audley couldn't be plainer than that. He had to craft a tight Budget and impose taxes and cut expenditure to pass those IMF tests he used to sneer at while in Opposition. He had better stop snickering at those IMF tests now!

 

FISCAL RESPONSIBILITY

 

Peter Philips said last week, "I urge the administration to put in place credible programmes that will prevent future high and recurring fiscal deficits which drain the economic lifeblood and cause hardship for people. Economic growth rests on fiscal responsibility, the improvement of the macroeconomic fundamentals ... and the continued reduction of unsustainable public debt."

But, Peter, you can't eat your cake and have it. If the Government is to do that, it has to raise taxes to close deficits and cut expenditures to meet the primary surplus. And if the Government had not made any attempt to give back anything, totally reneging on its election promise, would the PNP have kept quiet and applauded them for fiscal responsibility? Let's be real.

But speaking of reality, Peter spoke some of continuing realities. Realities which, in my view, no party has given us any guarantees about changing: "Too many of our people wake up every day facing the challenges of poverty and low income. They have to fret to find the doctor bill if they get sick or ... live hand to mouth from pay bill to pay bill."

The sad truth is, merely following an IMF fiscal austerity programme, to which both parties are committed, provides no absolutely secure way to change that reality for our masses.

- Ian Boyne is a veteran journalist working with the Jamaica Information Service. Email feedback to columns@gleanerjm.com and ianboyne1@yahoo.com.