Sun | Sep 15, 2019

Gordon Robinson | Nigel Clarke’s own goal

Published:Sunday | August 11, 2019 | 12:27 AM

What a preckeh since the latest living conditions survey (tabled August 2) established that poverty increased by 2.2% in 2017!

Nothing but dysfunction has followed. The saddest part was the deplorable but unsurprising glee with which the PNP pounced on the revelation. In kicking off the now routine game of political football, PNP striker Mark Golding hoisted the ball over his captain’s head and directly to the feet of JLP centre back Nigel Clarke. Neither seemed concerned that the game was being played with a ball inflated by people’s real suffering.

In a same-day release, Golding called the increase “a shocking revelation”. He blamed it on Government’s new tax policy, including the infamous ‘1.5’ and the shift to indirect taxation. He wrote:

The Opposition warned this would happen. Low-income wage earners, unemployed, pensioners and micro business operators, already existing on the edge of survival, have been made to bear these additional taxes while receiving no benefit from the election income tax break.

This poverty data shows that by skewing tax policy sharply towards greater indirect taxation, the JLP Government has perpetrated economic injustice on the people. In a country marked by wide income and wealth inequality and lacking an inadequate (sic) social safety net for the poor and vulnerable, this outcome was entirely predictable.

Entirely predictable, Mark? I thought you said it was “shocking”? Politicians are truly precious.

As the ball floated to his feet, Nigel essayed a crunching tackle on himself. He was everywhere on the field, creating more defensive strategies than Sam Allardyce on steroids. In true Billy Bunter style, he talked himself into knots.

Calling Golding’s release “wild” AND “grand” (LOL!), his first reply was:

If Golding’s narrative were correct, we’d have expected to see poverty rise uniformly across Jamaica in 2017 … . We’d also expect overall poverty should’ve increased in 2016 … , considering the switch to indirect taxes began in May 2016. But neither of these happened.

What empirical basis or rationale does Nigel have for those theories? First, the effect of the taxation shift on the economy wouldn’t have registered until late 2016. Second, rural and urban economies are totally different and react to different stimuli. If that weren’t the case, why does PIOJ/STATIN routinely disaggregate these statistics?

In 2015, STATIN statistics revealed that poverty declined in the Kingston Metropolitan Area (KMA) from 15.3 per cent to 14.3 per cent – and in “other towns” (16.2 to 14.7) – but significantly increased in rural areas (24.9 to 28.5). Poverty’s reaction to policy isn’t routinely uniform.

Nigel exposes the inconsistency of his argument by pointing out that in 2017, rural poverty actually declined (by 0.4 per cent), which he says means that indirect taxation wasn’t driving urban poverty decline. So what drove the 2015 rural poverty increase? Direct taxation was high. Indirect taxation was low (compared to 2017). It’s elementary, my dear Nigel. Consumption taxes affect ALL who spend while direct taxation more affects earnings than expenditure. Was it Government’s 2017 policy to sacrifice poor people’s ability to spend on the altar of tax cuts for those earning millions per year? Obviously, consumption taxes affect urban dwellers (bigger spenders) more than rural but cuts the spending power of the most vulnerable everywhere.

But in scrambling around like an NFL quarterback avoiding oncoming linebackers, Nigel had more answers. He said the poor weren’t asked to spend any more because inflation was low during the period. DWL!

Furthermore, the channel through which the switch from direct to indirect tax … would’ve been manifested through increased prices, i.e., higher inflation … . In 2017, inflation was 5.2 per cent; however, core inflation (i.e., the inflation derived after stripping out volatile external factors and which more accurately reflects domestic policy changes) remained unchanged at around 2.5 per cent ... . Therefore, Mr Golding’s rant about ‘low-income wage earners, unemployed, pensioners and micro business operators’ being ‘made to bear these additional taxes’ is not borne out by the data.

Sigh. When the new tax policy was imposed, did Government “strip out volatile external factors”?

Like Government’s official exchange rate, its inflation stats bear no relation to life as experienced by those around the poverty line. ‘Inflation’ doesn’t take into account the expense of getting a loved one to a hospital from deep rural Jamaica or the adverse effect of delayed, unaffordable or unavailable healthcare to a family’s earning capacity.

‘Inflation’ doesn’t account for security guards’ unattractive options while having to walk to work and go without lunch or pay $1,000 (plus GCT) for an unhealthy burger meal; or domestic helpers who must pay transportation costs from faraway parishes because there’s no work where they live; or Portmore residents who must pay tax (oops, sorry, ‘toll’) for the privilege of driving to work.

‘Inflation’ doesn’t account for extortionate bank fees paid weekly by low-income earners to cash miserly pay cheques. These non-inflationary realities cause real, abject poverty for even the most unlikely victims (on appearances) while Government’s sole interest is to collect indirect taxes from them. The tax policy didn’t ask the poor to spend more. It forced them to spend less.

Nigel tried another bluster:

A possible explanation … lies in the distribution of remittances across various subgroups. Overall, remittances increased only marginally. However, in [KMA], the proportion of households receiving remittances, in the two lowest consumption groups, declined by an appreciable amount in 2017 … .

Contrasted against rural Jamaica [where] the proportion of Jamaicans receiving remittances jumped from 38.6% to 49.1% in the lowest consumption group, and from 45.8% to 46.9% in the second-lowest consumption group ...

What the framfrig does this have to do with government policy to alleviate poverty? How does this respond to Mark’s analysis regarding indirect taxation? Nigel Clarke, please don’t embarrass me. Remember me? Your greatest supporter? Are you SERIOUSLY telling me that Government’s economic policy for poverty alleviation depends on remittances? What’s your plan when Clown Trumpy deports thousands of illegal Jamaican immigrants? More indirect taxation? Fer Crissake!

Then, came the most egregious excuse of all:

Another potential explanation lies in the occurrence of a general election in 2016, accompanied by heavy spending by political candidates and parties, much of which would’ve been directed in areas associated with poverty. This would’ve affected consumption in 2016, skewing the poverty number in that year. We see similar very large one-year drops in the poverty rate in other general election years. In 1993 (from 33.8% to 24.4%); in 1997 (from 26.1% to 19.9%); and in 2007 (from 14.3% to 9.9%).”

Jesus H. Christ on a Chinese crutch! Really? Seriously? Are you admitting that government expenditure (the only expenditure POSSIBLY affecting poverty rates) is available to “political candidates”? Surely that’s illegal? Which receiver of lawful candidate spending (e.g., media or transport operator) would be below the poverty line save for inflows from election campaigns? You actually said general elections are “accompanied by heavy spending by political candidates and parties, much of which would have been directed in areas associated with poverty”. What areas? Are you saying that political candidates routinely buy votes? How would three weeks of election spending bring the poor above the poverty line?

In his seeming panic, Nigel failed to cite 2012 stats (the year after 2011’s election). In 2012, KMA poverty increased from 14.4% (2010) to 19.7%; “other towns” from 16.6% (2010) to 20%; and overall from 17.6% (2010) to 19.9%. Rural poverty declined from 23.2% to 21.3%. I guess plenty votes were bought in rural Jamaica. And remittances were up.

This must be the Guy Lombardo Show!

But the most offensive impression taken from Nigel’s arrogant, scattered responses to Mark’s simple analysis is that I’m certain, had poverty declined in 2017, he would NEVER put Jamaica through this embarrassing exercise in nitpicking. How am I so sure?

On May 22, 2018, Nigel proudly announced in Parliament that the poverty rate fell significantly in 2016 to a six-year low. After noting across-the-board, all-areas reductions, he concluded chirpily, without context or analysis: “These significant declines in poverty are consistent with rising employment, low inflation, and the sharp 12 per cent jump in agricultural outputs in 2016 …” NOT ONCE DID HE MENTION THAT THOSE POVERTY STATS WERE “SKEWED” by heavy political spending or reliant on remittances! In 2016, “low inflation” was his poverty fighter, but he claimed that inflation was low in 2017 despite higher indirect taxes. So how come inflation affected poverty rates in 2016 but not in 2017? Who’s the real poverty-buster? If poverty rates improve in 2019-20, will Nigel claim his excellent GCT exemptions policy as a major contributor? Will Mark admit the link?

Face it, Nige. If you could eat your cake and have it, too, you wouldn’t be so slim. It’s fiscal policy when you win. It’s fiscal policy when you lose. In this case, it’s the three-card tax trick. You lose this football game!

Peace and love.

- Gordon Robinson is an attorney-at-law. Email feedback to columns@gleanerjm.com.