Tue | Jun 19, 2018

'Let's be realistic' - Phillips pleads with Jamaicans to understand nation's economic dilemma

Published:Friday | February 15, 2013 | 12:00 AM
Finance Minister Dr Peter Phillips is flanked by Brian Wynter (left), governor of the Bank of Jamaica, and Financial Secretary Devon Rowe during a media briefing at Jamaica House in St Andrew yesterday. - Ricardo Makyn/Staff Photographer

Daraine Luton, Senior Staff Reporter

AMID THE hue and cry from sections of the society in response to a $16-billion tax package passed by Parliament this week, Finance Minister Dr Peter Phillips has urged Jamaicans to be guided by the country's economic reality as well as the global financial climate.

"I think it important and I plead for the country and all the stakeholders to have a realistic understanding of the kind of world within which we operate," Phillips said.

Since the announcement of the tax measures, the parliamentary Opposition, sections of the business community as well as the Church have chided the Government saying, among other things, that the manner in which it was done was deceptive.

Responding to those criticisms, Phillips noted that he had long telegraphed that revenue-raising measures were necessary to satisfy the preconditions for the signing of an IMF agreement.

"Let me remind you that in no jurisdiction does the minister of finance brief any section of the population about impending tax measures, for the fact that new taxes are market sensitive, and any information can be unfairly exploited," Phillips said while addressing senior journalists during a press conference held at Jamaica House in St Andrew yesterday.

He admitted that he could have used his broadcast to the nation alongside Prime Minister Portia Simpson Miller on Monday to re-state the prior actions necessary for an IMF agreement.

The minister said, however, that in light of the fact that the nation was informed previously that tax measures would be forthcoming, "I cannot understand the justification for any stakeholder to withdraw support from a national effort, which has been successfully developed and launched, and which stands at the heart of our very survival as a nation."

His reference was to the National Debt Exchange (NDX), the second debt swap launched by the country in three years.

Creditors key to Success

The International Monetary Fund (IMF) has said the success of the NDX will require high participation from creditors and Phillips yesterday said "the success of this effort requires all hands on deck".

In the meantime, Phillips has sought to justify his decision not to rely on the taxation committee of Parliament to have a role in determining the tax measures imposed on the country.

Under the revised Standing Orders of the House of Representatives, the Public Administration and Appropriations Committee (PAAC) has been mandated to receive a mid-year report on medium-term economic programmes that must be tabled by the minister of finance.

Having received the report from the minister, the PAAC, not later than February 1 each year, must report its findings to the Committee on Tax Measures. The Committee on Tax Measures is empowered to invite stakeholders to make presentations before it. A report must be sent to the whole House of Representatives by March 1 each year.

"It is to be hoped that this will help to not only raise the level of public awareness generally about our fiscal situation, but it will provide an opportunity for the House to engage, perhaps in the less politically captive aspect of the Budget, namely revenue raising," Phillips said when the amendment was being debated in the House last year.

But yesterday, the finance minister said that despite putting this argument to the IMF team, the staff of the multilateral did not budge.

Phillips revealed that the IMF said if Jamaica needed an agreement, its technocrats should immediately define the tax measures as the fund was not prepared to await the outcome of such an exercise.

"To quote specifically, as one official said, 'All we would really be doing is running the risk that we had an agreement to disagree later on about tax measures' and that was not a way in which our interlocutors were prepared to approach the question," Phillips said.

The minister said that in creating the most recent revenue measures, "every effort was made to minimise the pain for everyone".

The minister, meanwhile, said he was "not averse to discussions and consideration" of the tax measures that have been announced. He also said he was "open to suggestions and concerns".