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Friday, July 31, 2009
THE subject of taxes is usually high on the agenda leading up to general elections in any country, and it was no different in 2007 when the Jamaica Labour Party (JLP) sought to unseat the People's National Party (PNP) Government.
Finance Minister Audley Shaw
On the campaign trail, then JLP shadow minister of finance, Audley Shaw, argued that the party's ambitious projects would be financed not through tax hikes but through increased productivity.
"There'll be no new taxes and no increases," he told the Observer after the second of the three national political debates at the Creative Production and Training Centre in August 2007, a month before the September polls.
The plan, he said, was not to raise taxes but to increase productivity and employment.
"You're earning from increased output, you're earning from increasing production, you're earning from putting people to work. That's what Omar Davies has never understood and that's why he still has so many people still out of work in this country," Shaw said.
"There's no need to raise taxes when you're raising the level of output and productivity in the country. It is from that output and productivity that you're earning more, and when you earn more, people pay more taxes and the Government finds more money to do its various projects. That's what it's all about," he added.
Since then, however, productivity levels have fallen with the temporary closure of the Windalco and Alpart bauxite/alumina plants, partial divestment of the country's sugar plants and the downsizing of numerous corporate entities across the country.
The Statistical Institute of Jamaica reports that in October 2007, just after the JLP took office, the unemployment rate was 9.4 per cent and the total unemployed labour force was 119,800. As at January this year, the figures were at 11.1 per cent and 142,500 respectively.
At the beginning of this fiscal year, Shaw presented to Parliament a total budget of $555 billion with a tax package of $18.13 billion. He announced increases in the Special Consumption Tax on cigarettes, an introduction of a cess on gasoline, as well as General Consumption Tax of 16.5 per cent on items which were previously untaxed such as computers, books and food items such as oats and soups. The GCT was later rolled back on some of the food items and on non-educational literature.
The SCT on cigarettes caused the product to go from $6,000 per 1,000 sticks to $8,500, or $2.50 per stick.
The $8.75 fuel cess, in addition to increased customs user fees on imported finished petroleum products, which should raise some $13 billion, was earmarked for fixing the island's roads. The intention, the administration said, was that in year one 20 per cent of the proceeds from the tax would go to the Road Maintenance Fund, 35 per cent in year two and 50 per cent would be set aside each year afterwards.
While pointing to the world economic crisis as a cause of the downturn in Jamaica's own economy, the finance minister said the problems, which included a high debt burden and an inefficient and inequitable tax system, reflected "core structural deficiencies in our economy" which, he said, "have existed for decades".
"We have limited tools at our disposal to tackle the many problems that we face," Shaw told Parliament in April. "In the last decade, Jamaica was left behind as the rest of the world boomed. Now, with the world economy at a standstill, we find ourselves with limited resources to counteract the downturn. When we should have been growing and producing surpluses, we borrowed. Now we find ourselves with scarce resources and a massive debt burden."
http://www.jamaicaobserver.com/news/...IDN_T_HOLD.asp
THE subject of taxes is usually high on the agenda leading up to general elections in any country, and it was no different in 2007 when the Jamaica Labour Party (JLP) sought to unseat the People's National Party (PNP) Government.
Finance Minister Audley ShawOn the campaign trail, then JLP shadow minister of finance, Audley Shaw, argued that the party's ambitious projects would be financed not through tax hikes but through increased productivity.
"There'll be no new taxes and no increases," he told the Observer after the second of the three national political debates at the Creative Production and Training Centre in August 2007, a month before the September polls.
The plan, he said, was not to raise taxes but to increase productivity and employment.
"You're earning from increased output, you're earning from increasing production, you're earning from putting people to work. That's what Omar Davies has never understood and that's why he still has so many people still out of work in this country," Shaw said.
"There's no need to raise taxes when you're raising the level of output and productivity in the country. It is from that output and productivity that you're earning more, and when you earn more, people pay more taxes and the Government finds more money to do its various projects. That's what it's all about," he added.
Since then, however, productivity levels have fallen with the temporary closure of the Windalco and Alpart bauxite/alumina plants, partial divestment of the country's sugar plants and the downsizing of numerous corporate entities across the country.
The Statistical Institute of Jamaica reports that in October 2007, just after the JLP took office, the unemployment rate was 9.4 per cent and the total unemployed labour force was 119,800. As at January this year, the figures were at 11.1 per cent and 142,500 respectively.
At the beginning of this fiscal year, Shaw presented to Parliament a total budget of $555 billion with a tax package of $18.13 billion. He announced increases in the Special Consumption Tax on cigarettes, an introduction of a cess on gasoline, as well as General Consumption Tax of 16.5 per cent on items which were previously untaxed such as computers, books and food items such as oats and soups. The GCT was later rolled back on some of the food items and on non-educational literature.
The SCT on cigarettes caused the product to go from $6,000 per 1,000 sticks to $8,500, or $2.50 per stick.
The $8.75 fuel cess, in addition to increased customs user fees on imported finished petroleum products, which should raise some $13 billion, was earmarked for fixing the island's roads. The intention, the administration said, was that in year one 20 per cent of the proceeds from the tax would go to the Road Maintenance Fund, 35 per cent in year two and 50 per cent would be set aside each year afterwards.
While pointing to the world economic crisis as a cause of the downturn in Jamaica's own economy, the finance minister said the problems, which included a high debt burden and an inefficient and inequitable tax system, reflected "core structural deficiencies in our economy" which, he said, "have existed for decades".
"We have limited tools at our disposal to tackle the many problems that we face," Shaw told Parliament in April. "In the last decade, Jamaica was left behind as the rest of the world boomed. Now, with the world economy at a standstill, we find ourselves with limited resources to counteract the downturn. When we should have been growing and producing surpluses, we borrowed. Now we find ourselves with scarce resources and a massive debt burden."
http://www.jamaicaobserver.com/news/...IDN_T_HOLD.asp