Reviewing Opposition spokesman on finance’s Budget presentation
OPPOSITIONSPOKESPERSON on Finance Mark Golding, in his contribution to the Budget Debate earlier this month, outlined that economic progress was dependent on economic growth and that the Government has failed to achieve growth targets originally established, and as a result, the country will fail to progress as it ought to.
For example, Mr Golding outlined that a growth target of 10.1 per cent was established to be achieved between 2016 and 2020, while only 5.5 per cent might actually materialise from the Government.
He added that if growth had met its initial target, the Government could redirect budgetary expenditure to provide better compensation to civil servants, including teachers, nurses and police, as well as invest more in providing critical social services, for example hospitals, roads and water systems. The Opposition believes that if the Government made better budgetary decisions, the country would be better off than it is at the moment.
The opposition spokesperson on finance highlighted that the Government made a promise to achieve a growth rate of five per cent per annum in four years, but has been less than two per cent per annum and is projected to be 1.5 per cent next year – 3.5 per cent less than the promised target. In retrospect, Jamaica grew by 1.4 per cent in 2016-2017; 0.9 per cent in 2017-2018 and a projected 1.8 per cent for 2018-2019.
These are not good enough given the country’s potential. This has turned the ‘five-in-four’ into ‘1.5-in-four’. This indicates a failure by the Ministry of Economic Growth and Job Creation spearheaded by the prime minister. He cited publicsector workers who receive a four per cent salary increase when targeted inflation was four per cent, meaning they received no real increase.
Tax policy priorities and social equity
Mr Golding outlines that revenues from taxation increased by more than 44 per cent over the last four years, which is greater than the rate of inflation, which was 18 per cent for the similar period and nominal GDP that had only increased by 33 per cent. The increase in taxes in percentage terms is greater than the increase in economic activity, which is a cause for concern. The increase in tax collection, he added, was as a result of needed tax reforms that were implemented under the fiscal rules that were initiated by the previous government.
“So while there have been no new taxes, the Government has been collecting more from the people and the question is, how have these taxes been utilised?”
He cited a single mother who faced numerous tax burdens and would not benefit from any new relief measures that the Government announced during this year’s debate. This analogy was used to reference all the poor who will not benefit from the tax packages. Mr Golding outlined that poor people would be better off if the Government reduced either general consumption tax (GCT) on all goods or special consumption tax on fuel. The former People’s National Party administration reduced the corporate tax rate from 33 per cent to 25 per cent, and the GCT rate from 17.5 per cent to 16.5 per cent when they were in power. The Government has taken the approach to increase roadwork and infrastructure development instead of stimulating aggregate demand.
What about the $14-billion tax package?
Mr Golding believes that some aspects of the $14-billion tax package were necessary, but its benefits excluded a large portion of the population, especially the poor and needy. Therefore, it lacked equity.
What other challenges does the country face?
Mr Golding cited some areas of concern, including the deplorable healthcare sector that needs immediate attention. Many hospitals do not have the necessary equipment to provide reasonable healthcare. Many are without sufficient beds, and in some instances, diagnostic machines, including X-ray machines, are not working. These could be addressed more reasonably in the Government’s Budget.
He explored the negative effects of crime and corruption on the nation’s economy. Other mismanaged elements like the inflation target, a topsy-turvy exchange rate value, and an overburdened Office of the Prime Minister that oversees more than 13 departments and agencies have contributed to the country’s inefficiencies.
What solutions did he present?
Through a philosophy of progress, Golding pledged that the Opposition, if it formed the next government, would invest more in human capital by providing more access to education and training. Make more decisive efforts to improve rural agriculture and farming, especially doing more to explore the medical cannabis industry and spend more on housing for the poor and underprivileged.
He also mentioned steps to improve the social amenities in the inner city, for example, better garbage collection and erecting street lights in crimeprone areas. He said there was a fundamental difference between his party’s policies and those of the Government. This fundamental difference has laid the foundation for a more robust and equitable Jamaica, not a Jamaica for a privileged few but a Jamaica for all, he said. André Haughton is an economist and prospective parliamentary candidate.