Nedburn Thaffe, Gleaner Writer
As Jamaicans struggle to recover from the news that the Government has unleashed another massive tax package, financial analyst Ralston Hyman believes the nation has reached its limit as far as taxes are concerned.
"Economists will tell you that taxes are a function of income, so if you're not expanding the economy, then you won't be able to collect more taxes," Hyman said. "Over the last eight years, successive governments of Jamaica have imposed some $2.1 trillion in taxes on the country, but we have only been able to collect $2 trillion of that."
He added: "The numbers are telling us that the country has reached its taxable capacity so … while 'notionally' people can say people owe taxes, the money is not sitting out there because the economy is not expanding."
Hyman was addressing a Mona School of Business and Management Economic Action Plan Forum at the University of the West Indies on Tuesday evening. His comments came minutes after the Government announced it would require citizens to fork out a projected $15.9 billion in new taxes.
While arguing that the country needs to address its production problem instead of piling up more taxes, Hyman charged that one way of doing this was to look at the factors that are stifling production.
"What we need to do now is look at the supply constraints; what is constraining Jamaica's ability to produce more efficiently not only for the domestic market but also for the global market?"
He added: "I am of the opinion that the problem is not as complex as we make it to be. Inherent in our inability to solve this problem is the lack of political will and leadership and the tribal nature of our political leaders in Parliament."
He argued that reducing the size of the Cabinet, divesting non-performing assets and changing the Government's motor-vehicle policy are issues that must be addressed "in dealing with the problem of why we are underproducing and overconsuming".
He said also that a public-education exercise needs to be undertaken to enable Jamaicans to make the connections between the massive trade deficit and issues such as the high cost of energy.
"I am saying to you that this game of fiscal manipulation is not going to solve Jamaica's problem," he stressed.