Tue | Oct 17, 2017

Olive Nelson | Shaw's broken record and broken promises

Published:Sunday | June 26, 2016 | 12:00 AM
Olive Nelson
Audley Shaw, finance minister, closing the Budget Debate on May 25. Writes columnist Olive Nelson: "As of now, no party will need to suffer disfavour from broken promises. They will need only to get creative and blame it all on people power, Shaw style."
1
2

Those who knew and said ('Giving God a bad name', Gleaner, March 3, 2016, et al) that the promised $1.5-million tax threshold was operationally untenable, except applied across the board, and financially unaffordable without new taxes, may have thought that the Government would have had some difficulty admitting to that fact come implementation day. They would have severely underestimated the hoodwinking skills of Audley Shaw. 'How to score points from broken election promises' is the new paradigm in town, thanks to our minister of finance.

In his dramatic Budget presentation, Mr Shaw insisted that the Government would honour its $1.5m commitment. There was this minor inconvenience of having to wait another year for the full rollout, but, no problem, for that was merely a manifestation of people power in action. This was a government that listened to the people. The people had spoken, and he was not afraid to resort to name-calling to prove it. Members of civil society, trade union executives no less, and at least one journalist, Ian Boyne, had advised against it. In fact, the decision to "phase it in" was held to have been based on a suggestion by Helene Davis-White, a trade union leader.

Of course, with the International Monetary Fund watchfully standing by, it would be downright wasteful not to cite the multilateral as jointly responsible. They, too, we are told, had reservations about certain aspects of the tax plan as initially announced, and as a responsive government, the Jamaica Labour Party had no choice but to show good faith. Mr Shaw, clutching at every straw from the cautionary notes sounded by the articulate and influential minority, savoured the moment and revelled in his extraordinary ability to make a molehill out of a mountain. The naysayers had sought to spread confusion, he suggested, but just look at him now, spreading the prosperity to 251,000 people 133,000 more than the 118,000 originally mooted.

As of now, no party will need to suffer disfavour from broken promises. They will need only to get creative and blame it all on people power, Shaw style. Very soon, he will be appearing in a national broadcast to explain the continued slide of the dollar. I expect to hear that despite his instruction that the net international reserves (NIR) be used to defend the dollar, the Bank of Jamaica and the IMF had argued against it. They said it was unsustainable. He had listened to them and agreed that interventions in the foreign-exchange market should be sparingly effected. "Obviously, the shock-and-awe value of such limited interventions was not sufficiently potent to halt the slide, but just look at us now : our NIR is even healthier than before!"

And come September, the minister of education might well advise that since there has been so much furore around the removal of auxiliary fees in high schools, the Government has decided to rebrand and retain it for those schools so minded. "As a 'development fee', the schools dare not use it for non-development purposes without the written consent of the Ministry of Education. Just imagine how this all-round development will advance the Government's growth agenda and all because we listened to the people!"

Stripped of all the theatrics, however, the Government has failed miserably to honour its $1.5m commitment. Not only has it not met its All Fools' Day deadline, not only has it reduced the amount of the benefit promised, it has nullified the effect of the revised amount with the immediate imposition of increased indirect taxes, contrary to the earlier undertaking given by the JLP.

For those earning at the very top or above the new $1m threshold, the increase in their take-home pay will look more like $8,500 come July instead of the promised $18,000, and the relief would be significantly less for those nearer the edge that those earning $700,000, for example, would be taking home only approximately $2,230 more each month.

 

Inequity

The inequity of it all is compounded by the fact that those earning under $640,000 (other statutory deductions included), not currently subject to income tax and, therefore, not eligible for any additional tax relief (however high the threshold may be pitched), are being forced, like everyone else, to make an advance payment to cover the cost of this face-saving farce every time they travel, buy a litre of petrol, or face some related price increase.

At the end of the day, if Mr Shaw's estimates are correct, the Government would have collected from its $13-billion tax package $1 billion more than the cost of the $12-billion PAYE tax revenue forgone. To that extent, they alone (with the possible exception of Supreme Ventures Ltd) will benefit from this little piece of prosperity carrot, which was so recklessly, but so effectively, dangled before electors in February.

Despite all of this, rumour has it that there are still people around who expect this JLP Government to deliver on its other election promises; that there are those who still believe that they will be better off after the highly anticipated July pay day; those who believe the additional PAYE relief of $500,000 will materialise on April 1 next year; those who still think that the enabling legislation for fixed election dates and prime ministerial term limits will be passed during this administration; those who expect to have their minimum wage doubled any time soon; and those who are preparing to discard the locks on their front doors, no longer to be haunted by such reminders of an insecure and violent past.

Our gullibility knows no end, but not to worry. Our Happiness Index ratings will forever remain high in this great little land of make believe.

- Olive Nelson.com is a chartered accountant. Email feedback to columns@gleanerjm.com and olivescottn@gmail.com