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<TABLE cellSpacing=0 cellPadding=1 width="100%" border=0><TBODY><TR><TD><SPAN class=TopStory>Government's taste high, buries country in debt</SPAN>
<SPAN class=Subheadline></SPAN></TD></TR><TR><TD>Ken Chaplin
Tuesday, April 03, 2007
</TD></TR></TBODY></TABLE>
<P class=StoryText align=justify>Finance minister Dr Omar Davies in his 2006 budget speech clearly stated that government would increase the threshold below which Jamaicans would not have to pay income tax by 42 per cent to $275,000 with effect from January 1 this year.<P class=StoryText align=justify>This means government would have to give up a large amount of money at the same time. I wondered then how this was possible when the government was running a high fiscal deficit of more than $38 billion. The fiscal deficit is the difference between what government earns as revenue and grants and what it spends. Government is therefore spending far more than it earns so it has to borrow billions to close the gap, pushing up the total public debt to nearly $1 trillion which Jamaicans will never be able to pay off. At the same time, what is alarming is that the debt is running 130 per cent of what the country produces in goods and services or what in economic terms is known as the Gross Domestic Product. Government earns a lot of money and does a few good things with it, but much has been wasted, especially in cost overruns. Corruption also has a big bite.
When the proposal to increase the threshold was announced, it was greeted with excitement by people, because it would mean thousands of workers and pensioners would not have to pay 25 cents in income tax on their salaries and pensions below $275,000. However, I wondered how the government could give up so much money. Then I remembered that the general election was very much in the air. Then the climate for the election became unfavourable, and Dr Davies decided he would not run with the threshold again, apparently not until the climate is favourable. He has given no time when he will bring the new threshold on stream. I suspect it will not be until nearer the time when Prime Minister Portia Simpson Miller announces the date of the election. In February, the finance minister said that the proposed increase in the threshold was not an unconditional commitment. However, when he first announced it there was no condition.<P class=StoryText align=justify>The bad thing about loans and high taxes is that not much of the money is used on the basis of priority to meet the basic needs of the people which is the fundamental responsibility of the government. The health service is appalling, primary and secondary education is backward, parochial and farm roads around the country look like the people are living in a jungle. Citizens pay high property taxes but many have to repair their roads. The bridges on some of the roads are falling down. Domestic water supplies are severely inadequate, many police stations are dilapidated, some have no cars to answer emergency calls and crime has become intolerable and scary. The justice system is underfunded, leading to delays in cases, some for as long as five years. It also militates against the poor.<P class=StoryText align=justify>Certainly, on the basis of its performance in these vital areas of service over the more than 17 years it has been in office, the government does not deserve a fifth term. To have a chance in the general election, government will have to make considerable improvements in these areas. Prime Minister Portia Simpson Miller has been in offfice for one year and the misgovernance is not her fault but the undesirable legacies of former prime minister PJ Patterson.
However, people are arguing quite seriously that Mrs Simpson Miller has shown no inclination to take a new path, waiting, as she put it, for her own mandate. But she was given a mandate from the moment she was sworn in as the new prime minister. Nevertheless, one must be fair and note that the Patterson administration has carried through a few good programmes like th
<SPAN class=Subheadline></SPAN></TD></TR><TR><TD>Ken Chaplin
Tuesday, April 03, 2007
</TD></TR></TBODY></TABLE>
<P class=StoryText align=justify>Finance minister Dr Omar Davies in his 2006 budget speech clearly stated that government would increase the threshold below which Jamaicans would not have to pay income tax by 42 per cent to $275,000 with effect from January 1 this year.<P class=StoryText align=justify>This means government would have to give up a large amount of money at the same time. I wondered then how this was possible when the government was running a high fiscal deficit of more than $38 billion. The fiscal deficit is the difference between what government earns as revenue and grants and what it spends. Government is therefore spending far more than it earns so it has to borrow billions to close the gap, pushing up the total public debt to nearly $1 trillion which Jamaicans will never be able to pay off. At the same time, what is alarming is that the debt is running 130 per cent of what the country produces in goods and services or what in economic terms is known as the Gross Domestic Product. Government earns a lot of money and does a few good things with it, but much has been wasted, especially in cost overruns. Corruption also has a big bite.
When the proposal to increase the threshold was announced, it was greeted with excitement by people, because it would mean thousands of workers and pensioners would not have to pay 25 cents in income tax on their salaries and pensions below $275,000. However, I wondered how the government could give up so much money. Then I remembered that the general election was very much in the air. Then the climate for the election became unfavourable, and Dr Davies decided he would not run with the threshold again, apparently not until the climate is favourable. He has given no time when he will bring the new threshold on stream. I suspect it will not be until nearer the time when Prime Minister Portia Simpson Miller announces the date of the election. In February, the finance minister said that the proposed increase in the threshold was not an unconditional commitment. However, when he first announced it there was no condition.<P class=StoryText align=justify>The bad thing about loans and high taxes is that not much of the money is used on the basis of priority to meet the basic needs of the people which is the fundamental responsibility of the government. The health service is appalling, primary and secondary education is backward, parochial and farm roads around the country look like the people are living in a jungle. Citizens pay high property taxes but many have to repair their roads. The bridges on some of the roads are falling down. Domestic water supplies are severely inadequate, many police stations are dilapidated, some have no cars to answer emergency calls and crime has become intolerable and scary. The justice system is underfunded, leading to delays in cases, some for as long as five years. It also militates against the poor.<P class=StoryText align=justify>Certainly, on the basis of its performance in these vital areas of service over the more than 17 years it has been in office, the government does not deserve a fifth term. To have a chance in the general election, government will have to make considerable improvements in these areas. Prime Minister Portia Simpson Miller has been in offfice for one year and the misgovernance is not her fault but the undesirable legacies of former prime minister PJ Patterson.
However, people are arguing quite seriously that Mrs Simpson Miller has shown no inclination to take a new path, waiting, as she put it, for her own mandate. But she was given a mandate from the moment she was sworn in as the new prime minister. Nevertheless, one must be fair and note that the Patterson administration has carried through a few good programmes like th