Ian Boyne, Contributor
It was an exquisitely masterful set play by the Opposition in the Budget Debate last week. Audley Shaw tackled Peter Phillips by making a strong case that his Budget was not game-changing and growth-inducing as marketed, while Andrew Holness tarnished Portia's goalscoring advantage as the indisputable champion of the poor. The People's National Party's (PNP) defence was left totally outmanoeuvred.
Dismissing as "half measures" and mere "buffet-style helping of a few selected items", Opposition Finance Spokesman Audley Shaw ripped into Finance Minister Phillips' Budget, tossing it aside as "nothing more than tinkering and fiddling" when "courageous and fundamental game-changing action is what is now needed". You can't miss the strategic brilliance here: Phillips has received the endorsement of the powerful Gleaner Company and the private sector because of his supposed toughness in taking hard decisions for austerity, and for not pandering to "populist sentiments", including, they charge, in his own party leader and prime minister.
Now his Opposition counterpart is saying all that is just a mirage; the actual steps he has taken in this Budget show he is still too timid and tepid. "With bold decisions, economic stimulus could have been garnered. Instead, what has been presented is not stimulus but potential toxic shocks to remaining sectors of the economy that have been the lifeblood of our economic recovery, including tourism, telecommunications and business process outsourcing, agriculture and small businesses."
So Shaw has ingratiated himself with powerful sections of the private sector, including the influential tourism lobby which had already been bawling bloody murder over Phillips' taxes on the industry, with the Butch Stewart-owned Observer carrying out an incendiary campaign.
This Budget was "hostile to generating growth" and what was needed was for "strong, purposeful leadership that confronts and educates the people into the need for radical change and transformation thinking into the way we do things". It's no wonder that The Gleaner, main media backer of Phillips, was gushing in its editorial last Thursday ('Audley Shaw did well'): "This newspaper was encouraged by the maturity of Mr Shaw's presentation ... . Mr Shaw recognised the depth of Jamaica's economic crisis and the narrowness of options faced by the country."
The Gleaner editorial noted: "He (Shaw) suggested, like us, that Dr Phillips might have moved faster on the supply side of tax reform to help stimulate growth." Ah, so Shaw proved even more favourable than its darling, Peter Phillips. Shaw showed that he was closer to the Private Sector Working Group (PSWG), whose recommendations are canonised in the circles of the power elite. "By implementing these half-baked measures, some of which are injurious to growth in some sectors, the minister is squandering the opportunity for tax reform to begin the major restructuring of the economy ... ," Shaw charged.
It was one neoliberal lecturing another latecomer neoliberal about how to run a capitalist economy: "An economy in distress either needs a stimulus or it requires a tax-expenditure package that encourages investment and growth in the productive sectors." Claude Clarke would love Shaw for this!
Shaw actually said he would apply GCT on more items (a PSWG recommendation), but, importantly, that he would lower GCT to 10 per cent, raise the personal income tax threshold in a significant way and implement a cash-transfer system for the vulnerable affected by GCT removal on basic items - which is what the PSWG recommends. In fact, in fairness to the PSWG, its recommendations, if adopted fully, would provide more buffer for the poor and lower middle class than what the Government has presented.
Under its proposals, income tax would be lowered to 15 per cent for all those earning up to $1.1 million, GCT would go down to 12.5 per cent (unlike Phillips' paltry one percentage-point reduction); GCT on electricity would not be at 16.5 per cent, and $2 billion would be allocated to "supplement targeted mechanisms to support the vulnerable". The PSWG's recommendations would provide some stimulus and consumer power to people while seeking to cushion the blow to the poor.
Shaw's overarching point was that Phillips' Budget did neither. It was a devastating critique, for it pulled the rug from under the PNP on two critical areas: its rebranding of itself as a party serious about game-changing economic reform and one which traditionally championed the cause of the poor. It was in the latter area that the tackle was more deadly, as the ball was skilfully passed to Captain Andrew, who was marking the star of the PNP team.
Andrew Holness was at his rhetorical best. He seemed to have learnt a few things about political communications since December 29. "The light you thought you saw at the end of the tunnel was the Peter Phillips and Portia Simpson Miller tax train coming at you without mercy. This Budget is not bitter medicine. It is poison." Ouch!
Playing the moral card, which had effectively been used against his party in the last elections, Holness said the Government had a "clear breach of trust" with the people. He was brutal in his tackle of the PNP's best player, with a marking that was as precise as it was surgical:
"Your words have come back to haunt you. Madam Prime Minister, you played on the fears of the poor and the vulnerable and told them that you could do better. The people believed you and gave you power. They gave you power because they believed you would protect them and make life better for them. With this tax package, the people feel you have deceived them. You never really wanted to help. All you wanted was power. Now that you have the power, what are you going to do with it?"
Oppressing the poor
He recalled Omar Davies in 2009 calling for the financial institutions to be taxed rather than the poor. "Why didn't you insist on the 'fairer tax' proposed by Dr Davies, instead of placing this taxation on basic food items without any provision to protect the poor? That is oppressive, Madam Prime Minister." Respectful tone, but blistering impact.
Polemics aside, Holness made an unassailable point: GCT exemptions should not have been removed without adequate mechanisms of social protection for the poor. Even the PSWG, which lays no claim to being politically progressive, called for that. Interestingly, the special tax committee (chaired by Peter Phillips) just recently rejected the PSWG's recommendations to remove GCT exemptions from basic foods, saying sufficient mechanisms had to be put in place to protect the poor. And the prime minister publicly opposed removing GCT exemptions in that Bloomberg interview.
No cosmetic changes to the Programme of Advancement Through Health and Education (PATH) would do. I agree totally with Holness that "the present programme focuses on a too-narrow segment of the poor". Plus, the programme has been very inefficient. An inner-city member of my congregation with six children has told me that it has been two years since she has signed the forms and received visits without one darn thing being done to get her on PATH.
The poor are today faced with increased prices for patties, mackerel, buns, crackers (apart from water crackers), syrup, corned beef, chicken, condensed milk, eggs, as well as a host of other items bound to be raised because of the 65 per cent increase in GCT on electricity, higher transportation costs, plus other pressures from a declining dollar.
An up-and-running, highly efficient and significantly expanded social-protection system should be in place before these burdens are placed on the backs of the poor. Holness put it well: "Placing GCT on basic food items without developing a system for protecting the poor violates the principle of equity that guides tax reforms."
Portia and Peter will have a Herculean task when they speak this week. The speech writers must not mistake the challenge: They can't come with the argument that the Opposition is resisting austerity, when Andrew himself spoke of bitter medicine and knows we have few options. That diversionary tactic would be totally unconvincing. In fact, the Opposition is saying the PNP is not bold enough in its reform measures. It is just tinkering. So they are not resisting austerity or tough measures to deal with our debt and fiscal deficit. They are saying Phillips' measures are injurious to the productive sector - and they have hoteliers, people in the poultry and agriculture sector, people in the financial sector, people in telecommunications, in the book industry, and people in small business, backing them.
Peter can't come on Wednesday and say Audley is resisting tough decisions. No. Audley is being praised by The Gleaner and other elements in the power elite for wanting to adopt more of the PSWG's recommendations sooner. And Audley has made a seemingly plausible case in his presentation that some of the taxes (particularly in telecommunications) are technically flawed. So Peter can't cast Audley and Andrew as anti-reform. They would also craft a Budget acceptable and credible to our masters at the International Monetary Fund and in the international capital markets. They are saying they are better, more experienced neoliberals, not reformed socialists!
And they are saying - and this is the harshest cut of all - that they would better protect the poor, as the PNP has left the poor exposed. Lambert Brown was on his radio show blasting the Government for taxing the poor. He was more blistering and polemical than either Audley Shaw or Andrew Holness. Imani Duncan had to remind him, in raised tones, that she was a government senator and was supporting the administration, as these policies were backed not just by Peter Phillips but Comrade Leader Portia Simpson Miller. But 'Lami' said he did not care who was vexed, he had to stand up for the poor.
Indeed, the poor needed that defence. All the affected sectors have been lobbying and bawling out all week. But the poor have no one bawling for them. I have not seen any strident release from the Civil Society Coalition. The trade unions are silent. What has happened to the progressive forces? Is everybody intimidated or eager for some spoils and scarce benefits? Or fearful of victimisation? Lami represents a ray of hope, and no one can accuse him of not loving Portia.
Portia, the poor await you on Tuesday. Do the right thing.
Ian Boyne, a veteran journalist, is the 2010-11 winner of the Morris Cargill Award for Opinion Journalism. Email feedback to firstname.lastname@example.org and email@example.com.