Good taxation is always bad politics

Daniel Thwaites

I won't rehearse the arguments about the likely minuscule impact of this controversial withdrawal levy on most people, how necessary it is to fund the Government, or how it's very well designed to skilfully avoid negatively impacting the poor. The additional cost for any common transaction can't even buy an icy-mint paper, much less an icy mint, and if you're intelligent enough to read the Sunday newspapers, you know that already.

Furthermore, the levy is efficient and difficult to evade, which are things people say they want from policy when talking in theory and about somebody else's money. Just look at the support the measure has received from economists and people who make it their business to study these things. The withdrawal method is safe and effective.

Instead, I want to look at why so many people are pissed off. One reason is that Jamaica is the only place I know where you can put money in the bank then come back to find less. You ask, "How come?", and the very good-looking bank teller explains that the bank has taken a fee for this, and a fee for that, and horse dead and cow fat.

That is why even though the public normally has zero interest in the conduct of parliamentary committees, when Fitz Jackson proposed an investigation into bank fees, it was like he had painted his face blue and mounted a stallion like Mel Gibson in Braveheart.

I find the very idea of banks charging a fee for depositing or withdrawing your own money offensive. Competition for the public's business should have seen them disappear, at least for a minimum number of transactions per month. Instead, the bankstas are like a kartel with less vybz. Dem chop up yuh money fine-fine, and when dem done, yuh can't find it.

Anyway, I am of the view that a little consultation and notice, even to work out the practicalities of collection, would have gone a far way here. That failure may have a tremendous cost - more than the $2 billion.

Another aspect is how our wondrous political culture keeps driving us in the direction of Haiti, not Barbados, which is why I'm working on my bad French before even trying with the Creole.

Consider Audley. Anyone au fait with his style knows he's a good speaker, and he acquitted himself well. En passant, Audley's points about Government hiding arrears and jilting the figures are de rigueur in our Budget debates. Just the other day, it was Peter saying that of him in the annual tête-à-tête.

Au contraire to Audley, upon inspection, it emerges that Peter did not make a promise of no new taxes. However, that was the reportage that went undenied, which was a faux pas. Fair enough! New standard: A report, if not specifically denied, constitutes a promise.

But the pièce de résistance was Audley's lecture on the exchange rate because even though he "provided selective data", I think he's on to something, and price predictability is a major source of confidence. I can't forget, though, that he oversaw significant devaluations, even while he was hors de combat and dodging the IMF. It moved from J$69 to J$86 for US$1. N'est-ce pas?

Remember now, by the time Peter arrived, returning to the IMF was a fait accompli. And it's one thing to convince the investor class, as Audley did, that the JDX was necessary, but it's quite another to actually carry forward tax, public sector, and pension reform, which Audley largely failed to do.

Remember also that as has been our perpetual problem, Audley's revenue could never match his expenditure. So one of his proposals was to extend GCT to all items en masse, while lowering the GCT rate and increasing PATH benefits.

Even now, that sounds like good sense to me as it would have removed market distortions and simplified the GCT regime. Good economics. Bad politics.

The suggestion that taxes could be applied to items such as cornmeal and sanitary napkins made for some riotous electioneering. The strong implication was that Audley would tax you for your lingerie - and even for what's under it. And we all know that the tax on that is already too high.

slim down

So there you have it. The Opposition is only too happy to return the favour now, and my bet is that the small withdrawal levy, just like Audley's GCT proposal, makes too much sense to survive our system.

Meanwhile, no government has shown the capacity to seriously slim itself down, but nobody wants to pay a penny more, so we're in a permanent cul-de-sac, and really this is déjà vu all over again.

My whole lifetime in Jamaica has been, at best, occasionally hobbling forward, and most often, sinking into la mer. When difficult decisions have to be made, our tendency is to join the avant-garde campaign against economic reality, cursing the heavens, the iniquitous world system, but most of all, each other.

Incidentally, Marx was talking about the French when he said that history repeats itself first as tragedy, then as farce. Nuh so? What about our repetitive pattern, over and over and over again? How deep is that farce?

Just Friday morning, I listened to Monsieur Andre [sic] Holness, and it's clear that the rollicking joyride is going to continue as my generation gets into the fun. Plus ça change, plus c'est la même chose. Never mind that the joke is getting stale. Think this little levy was hard? Pension reform is due next year, and that's why the general election campaign has begun. C'est la vie!

Daniel Thwaites is an attorney-at-law. Email feedback to columns@gleanerjm.com.