LETTER OF THE DAY - Biting the Budget bullet

THE EDITOR, Sir:

I sometimes agree with the minster of finance as he holds the line on granting wage increases. He has often had to say no to worthy cases, and even to prior agreements.

But we didn't get to this place overnight. It is the endgame of years of agreeing to expenditure we could not afford. The current recession changed that game, as borrowing to fund those excesses became impossible. Now we have 'Dr No' to deal with.

The minister has a tough job, but if his last Budget presentation is anything to go by, he recognises some of the problems, e.g. wage increases divorced from productivity increases, widespread tax evasion, and our predilection to borrow rather than produce. The strategies, though, to deal with these and other problems seem to be lagging.

The Government is, instead, intent on extracting even more revenue from a declining economy. Taxes are everywhere, and despite numerous studies over many years consistently pointing to the need for reform of Jamaica's tax system, little has been done to address this. We still prefer the hodgepodge of random tax measures to a more predictable and equitable system. The flip-flop on alcohol taxes is a current example.

The reluctance to cut expenditure with the seriousness the times demand, as well as the continuing economic decline, is driving Government's search for revenue through more taxation. This is a self-defeating pursuit, as it is already proving difficult to collect some taxes. Other countries in straits such as ours have made deep cuts in expenditure. The Government, perhaps with an eye on elections, has largely left one of its biggest expenses - wages and salaries - alone. We shall see if merely reducing its rate of growth is an effective strategy. The simple truth is that fiscal measures alone won't do.

strategy

Where is the coherent strategy for growing the economy? Where are the strategies to escape the economic fragility that dogs us? I'll suggest two. Top priority must be given to development of human capital. We score poorly here, and continue to squander limited human capital in illiteracy and poor training. Is the space for 'hewers of wood and drawers of water' the one we want to occupy?

Consider Singapore. It's the size of the parish of St Thomas, with no natural resources except its population of around five million, yet has a per capita income of US$40,000. Its education system is world-class. Jamaica, still unable to develop an educated population, has a per capita income of around US$5,000. And to think Singapore sent a delegation here in the '60s to see what they could learn from us! They apparently learned what we haven't.

The second strategy is simpler: uphold our laws. The general disregard we have for them is appalling. People cannot long live together and pursue common objectives if there are no common rules that bind all. The corrosive effect of this anarchy ensures that no national purpose binds us together. We become, instead of a nation, a loose confederation of groups or tribes; an amphictyony. Can we start on this second strategy today?

I am, etc.,

MICHAEL R. NICHOLSON

kovsky54@yahoo.com

P.O. Box 5171