Growth with Equity | Government initiatives to aid youth entrepreneurs
The following is a continuation of an analysis of Finance Minister Dr Nigel Clarke’s opening presentation in the Budget Debate, submitted before the response from his opposition counterpart, Mark Golding.
Another major highlight of this year’s Budget presentation was the new economic initiatives that were proposed by the Government. These proposals present several opportunities for youth in the job market and those interested in starting companies.
An attractive low-hanging fruit was the finance minister’s announcement that $192 million has been allocated to fund the new Global Services Skills Project, with the aim of upskilling Jamaicans to participate in the higher-valued global services sector.
Business process outsourcing (BPO) is one of the fastest growing local industries and it contributes in excess of US$450 million to Jamaica’s economy annually. Likewise, it employs a significant number of youth, who can now benefit from the possibility of higher incomes associated with an increase in the value-added chain that training can provide.
Abolition of the Minimum Business Tax and Increase Capital Available for MSME Sector
However, my favourite part of the presentation, being a CAPE economics student, is the announcement of the removal of the Minimum Business Tax. This is an annual tax of $60,000 placed on every business regardless of its start time and whether it is making a profit.
Other measures to boost economic activity for smaller firms include the abolition of the asset tax and the moving of the general consumption tax (GCT) threshold for businesses from $3 million to $10 million. This means that companies are not-liable to pay GCT when their earnings fall below the threshold.
Consequently, the removal of these taxes eliminates barriers to registration of small businesses and further facilitates their formalisation in the economy. It encourages youth to consider starting legitimate companies once they realise another burden has been axed.
It also makes them more eligible to receive start-up capital through programmes such as the launch of the Side Car Fund Facility that will provide $200 million in eligible early-stage start-ups. By improving the access to capital, the Government is encouraging the development of smaller firms in the private sector.
This example of supply-side economics has the potential to reap significant financial benefits as it will likely boost investment spending. It is also ideal to implement these initiatives at this crucial time, given the fall in the country’s debt-to-GDP ratio. This decision is also important if the Government is interested in improving the country’s score in the Doing Business Report.
Another step the Government has undertaken is its push to broaden the ownership base in the Jamaican economy. The stock market represents a viable option for young investors, which is represented by their renewed interest in the Jamaica Stock Exchange (JSE) Competition. Therefore, listing Wigton Windfarm on the JSE represents a significant investment opportunity in which the youth can partake.
The contents of this year’s opening presentation in the Budget Debate represent noteworthy opportunities for youth development and their participation in the economy. Essentially, the potential for economic growth is enormous and represents a more optimistic outlook for youth development, while the Government pursues its mandate of growth with equity.
Anthony Rhoden is a high-school student whose academic focus is economics. Send feedback to firstname.lastname@example.org.