Crass treatment of our economic situation

By Jaevion Nelson

The Budget Debate is perhaps one of the most exciting times outside of an election for political parties. They get to throw a few punches here and there at each other for either being 'uncaring' or attempting to derail critical programmes. All this in anticipation of an election and that it will help to win the votes.

Two things are of particular concern to me as the annual Budget Debate is under way: the bank transaction tax and the crass treatment of our economic situation (read rut) by our political leaders.

Will parliamentarians ever be fatigued of the sentiments and trajectory of their speeches? I can almost recite the speeches word for word, in the exact sequence, regardless of which party forms the government. Precious minutes wasted saying the same thing, every single time (in addition to the usual late start of Parliament). Sadly, we continue unperturbed. We regurgitate what we are fed year after year, unless the political colour of the messengers does not suit us or directly affect us, we are silent.

Jamaica's future hinge on the state of welfare (and aesthetics) of the environment in which the Parliament sits to make decisions on our behalf. Note, this is not an attempt to malign the residents of downtown Kingston. I am, however, now inclined to believe better will come when there is admission by our political leaders that we have all contributed to this quandary. Uncannily, some of those pointing fingers were there for a very long time while all of this was unfolding and worsening - some, for more than four terms in office on either side of the House. Sometimes, I am left wondering if the Opposition has no purpose in the Westminster system of government (though it is quite possible I got lost in the melodrama and theatrics employed to hold the Cabinet accountable to its duty to the people).

CHANGE COURSE AND INSPIRE

It would be good if the prime minister and opposition leader change course and inspire us in their budget presentation. It would make a world of difference, as it would if the media found silly sound bites used to sell news less attractive.

There is no debate that we desperately need money: we need to reduce debt to GDP and balance the primary surplus. I can understand why Minister of Finance Dr Peter Phillips has proposed this new tax on bank withdrawals (and transactions). Many of us think that is an avoidable tax that the Government can collect easily, but I'd like to suggest that doesn't make it a viable option.

I am honestly bothered that we are trying to convince people that we should support it because, in addition to being easy to collect, the 'poor' will not be affected and the rich will pay more. I am quite baffled by some of the voices of support actually. What a ridiculous argument, especially when you consider that the central Bank has as an objective to get Jamaicans who are unbanked into the formal system. Is this new tax not a disincentive to the poor to now be banked? The proposal appears to be regressive. Besides, what guarantee do we have that we will actually be able to raise over $2 billion with this new tax?

A June 2006 paper published by the Organisation for Economic Cooperation & Development, using the experience of six Latin American countries (namely, Argentina, Brazil, Colombia, Ecuador, Peru, and Venezuela) suggests this tax base can be quite elusive and that "bank transaction taxes are not a reliable source of revenue, especially over the medium term". The authors do, however, recommend "these taxes should be used only as a temporary means to mobilise revenue in situations of fiscal duress".

Perhaps, if we weren't paying lip service to an economic reform programme all these years we wouldn't be in this predicament. We wouldn't need to introduce a levy - however nominal the amount - on about two-thirds of Jamaicans for bank transactions. Do we not realise that every cent of every dollar that is taxed has an impact? That it reduces spending power?

I sure wish we didn't have to lament that the measures being proposed are to meet the IMF conditionalities and pass the test. But such sentiments would betray our fascination with scapegoating.

Jaevion Nelson is a youth development, HIV and human rights advocate. Email feedback to columns@gleanerjm.com and jaevion@gmail.com.