The Jamaica Labour Party (JLP) says that its planned constitutional challenge of the Government's plan to withdraw almost J$46 billion from the National Housing Trust (NHT) is aimed at protecting citizens' right to the enjoyment of property.
It is not its intent, the party insists, to derail Jamaica's pending economic support agreement with the International Monetary Monetary Fund (IMF).
We do not question the sincerity of that assertion by the Opposition. Its leader, Mr Andrew Holness, would, however, be conscious that his mere declaration of intent will have induced a new round of uncertainty in the economy at a time when the seeming imminence of an agreement with the Fund was causing a flicker of confidence.
The immediate issue of economic confidence apart, victory for the JLP would mean that the Government would have to quickly rethink its strategy if it is to achieve a fiscal surplus of 7.5 per cent of GDP annually over the next three fiscal years.
This potential conundrum brings us back to our suggestion of how the extraction from the NHT might be placed beyond legal challenge.
First, the Government could declare a three-year holiday/moratorium on employers' contributions to the NHT. Simultaneously, it would impose a three per cent payroll tax on employers, to be paid into the Consolidated Fund.
The effect of this is that Government would have the tax to help meet its fiscal challenges, with the need to impose additional taxes on firms. And the right of the NHT board to declare a payment/contribution holiday - accomplished within the appropriate legislative framework - could hardly be challenged.
It is important to appreciate the context within which the NHT debate is taking place. The most important of these is that after years of imprudent borrowing, Jamaica has an unmanageable debt of 140 per cent of GDP.
As part of the reckoning, our Government has to borrow less, spend less and manage its tax collection more efficiently. Even at that, Jamaica needs external support, part of which is having the IMF as financier and policeman.
In exchange for the IMF's imprimatur that will help unlock external resources, the Fund insisted on certain preconditions from our Government, including having in place a credible regime to meet the primary surplus.
The administration, having already announced a $15.9-billion tax package for the coming fiscal year, tapped the NHT to ease the extent of its taxation. The NHT, established to provide shelter for Jamaicans, has approximately $200 billion in assets, annual contributions - by employers and employees - of approximately $20 billion - and mortgage reflows of nearly $14 billion.
Its annual inescapable obligation is the approximately $3 billion a year it refunds employee contributors for the two per cent of their salaries they 'lend' to the NHT. This is repayable after seven years.
Critics argue that despite legislative amendment ostensibly allowing the withdrawal, the NHT has all the facets of a trust, making its resources the property of solely its members - the contributors. Now the JLP and an organisation led by connected persons are, separately, deepening the argument, moving from the law governing trusts, to the constitutional protection of the right to the enjoyment of property under Section 15 of the Charter of Fundamental Rights and Freedoms.
Our proposal, we believe, would put the issue beyond challenge.
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