JLP Government makes U-turn on Tax Package
The Prime Minister tried to rescue the credibility of his government in a speech to the nation on Thursday night December 23, 2009 when he said ‘we have listened and we have heard’. This was said in response to the negative reactions to the tax package that was announced the previous week.
The government have been saying for some time now that they ‘have no choice’ in going to the IMP for assistance, ‘no choice’ in levying more taxes, ‘no choice’ in laying off hundreds of workers etc. etc. However the apparent U-turn on the recently announced tax package demonstrates that they do have other options available. The Information Minister (Vaz) has said that the Finance Minister (Shaw) has the full support of the Cabinet but from the people’s reaction to the tax package, I am not sure that he is getting any support from the public in general or even from those who voted ‘green’ in the last general election.
In other countries, politicians usually try avoid ‘U-turns’ as it suggests lack of foresight, in other words, plain short-sightedness. The revised package is more palatable to the people in general but the U-turn could have been avoided if the government had given serious thought to the policies that they were planning to implement. The U-turn does not show that they are ‘listening’ rather it shows that they are not smart. It should be noted that this is the second time in less than a year that they have made a U-turn on a major tax package. This is a government that would like us to believe that they have the ‘balls’ to take the tuff decisions that are necessary at this time in the country’s history.
I must remind the government that they cannot run a country by referendums of public opinion on every policy decision that they have to make. If you have to wait on the approval of the public before policies are implemented, we will not get anything done. We need the right ministers heading the right teams and the right teams do not necessarily mean only people who support the Jamaica Labour Party. You may recall that when Saddam Hussain was ousted from power in Iraq, the new Iraqi government had taken the decision with the blessings of the United States to implement a program of debathification. This term refers to the’ process of removing former members of the ruling Bath party of Iraq from the military and civil office’. It did not take them long to realize that the country was going nowhere as they were literally wasting the resources of persons who could have been making a significant contributions to the new Iraq. We are no strangers to ‘debathification’ in Jamaica for as soon as the government changes hands we expect ‘heads to roll’. The replacements are not necessarily more suited for the jobs and sometimes we end up in a more unfavorable position as lack of experience usually shows up in the form of bad decisions.
Finally, both the Prime Minister and the Finance Minister have been using the recommendations of the Matalon review committee (2005) as the ‘taxation policy Bible for Jamaica’. I will hasten to point that contrary to their assertions, they are doing the very opposite of what the committee recommended. I am surprised that the press has not caught onto this or that members of the committee have not objected to the way their recommendations are being used. My quotation is taken from page one of the report and is as follows:
‘The reform package presented should not be considered simply as a “menu” of reform options from which preferred positions may be selected. Rather, the committee wishes to emphasise that in making its recommendations, the impacts in terms of economic effects, burden distribution, equity etc. have been measured based upon the outcome of the recommended package as a whole and given the interaction of all proposed measures. Any changes which government in its wisdom may deem appropriate should therefore be measured in the same light if the hoped-for internal consistency of the tax system is to be preserved. ‘
My opinion of this is that they were asking the government not to ‘cherry pick’ pieces of the report for implementation as it will not have the same impact as their recommendations were intended to be taken as a ‘whole’. In view of the above, the government should not blame the Matalon Committee for any hard tax pills that must swallowed now as the Matalon Committee made the recommendations but the government does not have to accept them. We should not forget also that the Matalon Committee completed its review in November 2004, then there were no plans to go back to the IMF and the current world crisis if it existed was only in its infancy. It may well be that we need to refresh the Matalon report in view of the current circumstances as the old report may have outlived its usefulness.
http://jis.gov.jm/pdf/pm-broadcast-dec232009.pdf
