PSOJ eyes greater economic development
Chairman of the ICD Group Limited and president of the Private Sector Organisation of Jamaica (PSOJ), Joseph Matalon, took aim at Jamaica's economic development yesterday.
Speaking at the eighth Annual Caribbean MBA Conference held at the Hilton Kingston hotel, Matalon highlighted the PSOJ's Economic Policy Framework which, he said, had the four pillars that could ensure economic growth and development for Jamaica.
According to Matalon, ensuring macro-economic stability; reforming the tax system; creating and enabling legal and regulatory environments; and reforming industrial trade and investment promotion policy were those pillars.
Matalon asserted that Jamaica was living way beyond its means and had one of the highest debt levels in the world.
"Our debt is larger than our economy and is four times as much as the taxes we collect. Jamaica's costs are the highest in the world," he lamented.
According to Matalon, the country's tax system is complex, inefficient and unfair. While the average rate of import duties on books is 10 per cent, for example, the average collection rate is only five per cent, since many persons take advantage of exceptions.
The PSOJ president believes it is cumbersome and expensive to do business in Jamaica because the regulatory and legal systems make the process difficult and expensive for persons to establish their own businesses.
Matalon posits that a stable macroeconomic environment is necessary for achieving high rates of economic growth and employment."The Budget process in Jamaica needs to be reformed. The Government of Jamaica needs to coordinate budgeting across the public sector and to construct multi-year budgets. The Government also needs to consult early and meaningfully with the private sector and other stakeholders in the Budget process," the PSOJ president said.
Continuing, Matalon said:
"The inefficiency and complexity of Jamaica's tax system acts as a major impediment to private- sector-led economic growth and job creation."
Direct and indirect tax rates
In resolving this issue, Matalon made it clear that a competitive general tax regime with internationally competitive direct and indirect tax rates needed to be implemented. Additionally, general consumption tax (GCT) rates should be lowered, the tax base broadened, and placing a standard GCT rate on all goods with limited exception was also highly recommended.
Matalon also said the tax administration should be reformed and that the Government should use a unified tax-return procedure. He also mentioned that the Government should stagger tax-filing deadlines for companies and implement detailed reforms in relation to investigations.
The ICD Group chairman recommended that the Government implement sunset provisions for regulation and amend the bankruptcy laws.
In outlining the PSOJ's economic framework, Matalon also said Jamaica's industrial trade and investment promotion needed to be reformed.
"Jamaica's inability to increase the technical capacity of its exports has limited its economic growth. For decades, Jamaica has seen little changes in its export basket. At the same time, exports have declined as a share of GDP. The inability to create emerging export sectors is a constraint to high levels of economic growth and employment," he said.
The PSOJ recommends that the Government re-invigorate industrial policies and target high value-added exports with sustainable advantage with mature sectors such as tourism and agriculture.
Matalon explained that the trade policy should be reformed which will allow all stakeholders to play an active role in establishing negotiating priorities and objectives through meaningful and early consultations.
"Freedom of labour needs to be implemented and strengthened between CARICOM countries in order to achieve economic development and growth," he said.
- Philando Neil