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Monday, September 16, 2013
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Overtaxation, red tape strangling Jamaica
By Gordon 'Butch' Stewart
Monday, September 16, 2013
Since the start of the year, Gordon 'Butch' Stewart, has been sharing ideas — culled from his vast experience as one of the Caribbean's most successful businessmen — to help lift Jamaica out of its economic predicament. In this column, Stewart, the chairman of Sandals Resorts International, makes the case for urgent tax reform and insists that red tape is choking the economic life out of the country.
It's an extraordinary truth that Jamaica, despite its relative small size, is blessed with countless opportunities for economic growth and development. Nobody disputes that anymore. The question is why are we not doing better as a country?
I'm convinced that we must start with a renewed approach to how we structure the Government and its organs to achieve economic resuscitation. The old non-productive model that we are still hanging onto, will not take us out of this quagmire.
In the course of my extensive work and travels through the Caribbean, I have seen first hand the economic stress from one end of the region to the next. However, in response to the severe financial constraints, the various governments have been reaching out to their people and companies which can make a difference.
One of the key approaches has been tax reform. Every country that is looking to move ahead has accepted that it is just not possible to make ends meet and achieve growth by a never-ending process of imposing higher and higher taxes on the same people and the same organisations. That is one of the most debilitating obstacles to growth of the Jamaican economy.
When businesses are doing well, the Government collects far more taxes. Right now, business in Jamaica is just not good. That is the clearest indication that a philosophy of tax and more tax will not work. All it achieves is driving more and more of the economy underground as businesses struggle to survive. The current taxation stream is slowly drying up at a time when the Government needs even more revenue.
Borrowing is a scourge
The alternative has always been to borrow more money and thereby compound the existing problem. That is the Jamaican story, where our debt is now over 130 per cent of our Gross Domestic Product. Even schoolchildren now know that we cannot continue to borrow at this frenetic and suicidal pace.
Borrowing is a scourge. There was a time when the ability to attract loans was glamourised and construed as a great achievement on the part of a Government. But there is nothing heroic about borrowing. We have got to be in a position to stand on our own two feet.
A smart government will start making creative deals through creative policies that investors, local and overseas, cannot refuse. Jamaica, with its natural resources, starting with our people and natural beauty, begins with an advantage.
There are patriotic and nationalistic investors who will strive with might and main and spend their last penny to develop businesses, but they need help through concessions from the Government, which must be an enabling partner.
If other Caribbean countries are doing it, there is no reason we shouldn't. There are small countries with small resources, but they are doing everything to capitalise on anything that they can leverage for economic growth to make life better for their people.
One of the assets we don't seem to recognise enough and use to our advantage is the fact that Jamaicans are extremely ambitious and willing to work hard, given the opportunity to do so. The stories of Jamaican successes achieved after migration are not myths.
When Jamaicans migrate...
I have had the privilege of travelling all over the world and seeing many of these Jamaicans at work. Some are highly successful and just about all are focused on getting the job done well. It's amazing to me that, here at home, so many people find it so hard to replicate the same effort and approach, or to find the motivation to make good of ourselves.
Of course, the system itself makes it extremely difficult. A young person trying to start a business will constantly run into a brick wall. I suggest to any serious politician that they accompany such a young person through the process and witness the bureaucratic red tape that is waiting to strangle them.
Start with clearing goods from the wharf. The convoluted bureaucracy, red tape and stupid policies will frustrate even the most optimistic young professional. It gets worse if he or she wants to start exporting which, ironically, is what our country so desperately needs. There are more agencies and more madness to encounter around every corner.
Keep It Simple, Stupid
It takes a very big and nimble business which can afford to employ enough people to overcome the red tape. I'm appalled at how difficult it is for us to accept the KISS principle — Keep It Simple Stupid! Parliament, with its great debates and extraordinary sessions just can't seem to find a way to rid us of this maze of convoluted and complicated bureaucracy, from getting a tax compliance certficate to a driver's licence.
Instead of empty proclamation after proclamation, let's get back to the KISS principle and watch the astounding progress that we will make.
To be sure, we have talked a great talk over the years with little to show for it. And nothing will change if we don't get beyond talking. The bureaucracy gatekeeper have got to be trained to get things done, and to get rid of the approach that says 'it can't be done'.
A smart government will also keep as a constant companion a business think tank, similar to a kitchen cabinet comprised of patriotic men and women of quality who will provide honest advice. In other words, this will be a sharp business advisory board that will come up with clever ideas on the way forward from a business perspective.
Not only must the Government be prepared to do so, it must be prepared to listen and to accept sound advice and get it done.
It pains me to see that other Caribbean islands — some without nearly as much resources, human or natural, as we have — making so much out of so little. We have somehow lost the drive to get things done here. Things that should be simple, like constructing a building, become so complex.
I recall Bruce Golding, while campaigning for the 2007 election, making a big deal about development and the application process, and promising that under his Administration if there was no feedback from the relevant state agencies after 90 days it should be taken that the application was approved. Many of us applauded that.
But it was not done. I don't know whether that was because of the distractions of office or a lack of courage, but I strongly believe that the system has to be forced to make things happen. Otherwise, it just will not move.
When former Prime Minister Michael Manley rolled the dice and relaxed foreign exchange controls, almost everyone felt that was suicide, and I know there are some who still believe that. But imagine how bad things would have been if exchange controls were on top of the bureaucracy that we have today! In my view, exchange liberalisation saved our business life. It took enormous courage of the kind we need today.
We have a Government that I believe means well. I repeat, what it now needs to do is set up this get-things-done apparatus driven by smart business people who understand the lay of the land and are willing to give of their time and advice.
The alternative to smart government is that we will live our lives tightening our belts, going from IMF agreement to IMF agreement, and getting deeper and deeper in debt, with smaller and smaller numbers of successful people and, for sure, greater disparity between the wealthy and the poor.
I live for the day when the campaign promises become hardcore reality. Let us stop the constant speech-making that means absolutely nothing.
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Monday, September 16, 2013
HOME | NEWS | SPORT | ENTERTAINMENT | BUSINESS | CARTOON | OTHER SECTIONS
COLUMNS
Overtaxation, red tape strangling Jamaica
By Gordon 'Butch' Stewart
Monday, September 16, 2013
Since the start of the year, Gordon 'Butch' Stewart, has been sharing ideas — culled from his vast experience as one of the Caribbean's most successful businessmen — to help lift Jamaica out of its economic predicament. In this column, Stewart, the chairman of Sandals Resorts International, makes the case for urgent tax reform and insists that red tape is choking the economic life out of the country.
It's an extraordinary truth that Jamaica, despite its relative small size, is blessed with countless opportunities for economic growth and development. Nobody disputes that anymore. The question is why are we not doing better as a country?
I'm convinced that we must start with a renewed approach to how we structure the Government and its organs to achieve economic resuscitation. The old non-productive model that we are still hanging onto, will not take us out of this quagmire.
In the course of my extensive work and travels through the Caribbean, I have seen first hand the economic stress from one end of the region to the next. However, in response to the severe financial constraints, the various governments have been reaching out to their people and companies which can make a difference.
One of the key approaches has been tax reform. Every country that is looking to move ahead has accepted that it is just not possible to make ends meet and achieve growth by a never-ending process of imposing higher and higher taxes on the same people and the same organisations. That is one of the most debilitating obstacles to growth of the Jamaican economy.
When businesses are doing well, the Government collects far more taxes. Right now, business in Jamaica is just not good. That is the clearest indication that a philosophy of tax and more tax will not work. All it achieves is driving more and more of the economy underground as businesses struggle to survive. The current taxation stream is slowly drying up at a time when the Government needs even more revenue.
Borrowing is a scourge
The alternative has always been to borrow more money and thereby compound the existing problem. That is the Jamaican story, where our debt is now over 130 per cent of our Gross Domestic Product. Even schoolchildren now know that we cannot continue to borrow at this frenetic and suicidal pace.
Borrowing is a scourge. There was a time when the ability to attract loans was glamourised and construed as a great achievement on the part of a Government. But there is nothing heroic about borrowing. We have got to be in a position to stand on our own two feet.
A smart government will start making creative deals through creative policies that investors, local and overseas, cannot refuse. Jamaica, with its natural resources, starting with our people and natural beauty, begins with an advantage.
There are patriotic and nationalistic investors who will strive with might and main and spend their last penny to develop businesses, but they need help through concessions from the Government, which must be an enabling partner.
If other Caribbean countries are doing it, there is no reason we shouldn't. There are small countries with small resources, but they are doing everything to capitalise on anything that they can leverage for economic growth to make life better for their people.
One of the assets we don't seem to recognise enough and use to our advantage is the fact that Jamaicans are extremely ambitious and willing to work hard, given the opportunity to do so. The stories of Jamaican successes achieved after migration are not myths.
When Jamaicans migrate...
I have had the privilege of travelling all over the world and seeing many of these Jamaicans at work. Some are highly successful and just about all are focused on getting the job done well. It's amazing to me that, here at home, so many people find it so hard to replicate the same effort and approach, or to find the motivation to make good of ourselves.
Of course, the system itself makes it extremely difficult. A young person trying to start a business will constantly run into a brick wall. I suggest to any serious politician that they accompany such a young person through the process and witness the bureaucratic red tape that is waiting to strangle them.
Start with clearing goods from the wharf. The convoluted bureaucracy, red tape and stupid policies will frustrate even the most optimistic young professional. It gets worse if he or she wants to start exporting which, ironically, is what our country so desperately needs. There are more agencies and more madness to encounter around every corner.
Keep It Simple, Stupid
It takes a very big and nimble business which can afford to employ enough people to overcome the red tape. I'm appalled at how difficult it is for us to accept the KISS principle — Keep It Simple Stupid! Parliament, with its great debates and extraordinary sessions just can't seem to find a way to rid us of this maze of convoluted and complicated bureaucracy, from getting a tax compliance certficate to a driver's licence.
Instead of empty proclamation after proclamation, let's get back to the KISS principle and watch the astounding progress that we will make.
To be sure, we have talked a great talk over the years with little to show for it. And nothing will change if we don't get beyond talking. The bureaucracy gatekeeper have got to be trained to get things done, and to get rid of the approach that says 'it can't be done'.
A smart government will also keep as a constant companion a business think tank, similar to a kitchen cabinet comprised of patriotic men and women of quality who will provide honest advice. In other words, this will be a sharp business advisory board that will come up with clever ideas on the way forward from a business perspective.
Not only must the Government be prepared to do so, it must be prepared to listen and to accept sound advice and get it done.
It pains me to see that other Caribbean islands — some without nearly as much resources, human or natural, as we have — making so much out of so little. We have somehow lost the drive to get things done here. Things that should be simple, like constructing a building, become so complex.
I recall Bruce Golding, while campaigning for the 2007 election, making a big deal about development and the application process, and promising that under his Administration if there was no feedback from the relevant state agencies after 90 days it should be taken that the application was approved. Many of us applauded that.
But it was not done. I don't know whether that was because of the distractions of office or a lack of courage, but I strongly believe that the system has to be forced to make things happen. Otherwise, it just will not move.
When former Prime Minister Michael Manley rolled the dice and relaxed foreign exchange controls, almost everyone felt that was suicide, and I know there are some who still believe that. But imagine how bad things would have been if exchange controls were on top of the bureaucracy that we have today! In my view, exchange liberalisation saved our business life. It took enormous courage of the kind we need today.
We have a Government that I believe means well. I repeat, what it now needs to do is set up this get-things-done apparatus driven by smart business people who understand the lay of the land and are willing to give of their time and advice.
The alternative to smart government is that we will live our lives tightening our belts, going from IMF agreement to IMF agreement, and getting deeper and deeper in debt, with smaller and smaller numbers of successful people and, for sure, greater disparity between the wealthy and the poor.
I live for the day when the campaign promises become hardcore reality. Let us stop the constant speech-making that means absolutely nothing.
SHARE THIS: Share via Email Share to Facebook Share to Twitter
MORE NEWS
Overtaxation, red tape strangling Jamaica
Jamaica for Jamaicans... first
Omar Davies at ringside, Hylton in the bleachers sucking bag juice
JLP contest offers contrasting views of leadership
Shaw vs Holness — the criterion is winnability
Don't be distracted
Those ganja tours
What about the Syrian people? Don't they count?
The national heroes debate continues
The OCG, pressure groups and institutional corruption
Back to school and other lessons
25 years since 'Gilbert' and we can't forget it
25th anniversary of 'Gilbert'
Give diplomacy a chance
You are wrong, Dr Lockhart
Farewell, sweet Jamaica
Goat Islands and the Chinese
Has the middle class failed Jamaica?
KingstOOn — a key to shared prosperity and sustainable growth for Jamaica
What's worth fighting for?
The war drums and Barack Obama's presidency
Mr Holness, your slip is showing
Lost in translation
Hats off to British Parliamentary democracy
'Silence' and 'warnings' over a US-led war on Syria
MORE...
HOME | LIFESTYLE | TEENAGE | REGIONAL | ENVIRONMENT | EDITORIAL | COLUMNS | CAREER | FOOD | ALL WOMAN | LETTERS | AUTO | VIDEO | WEATHER | CONTACT US
Mobile | View Standard Version
Terms and Conditions | Privacy Policy
Subscribe to our RSS Feeds
twitter Follow us on Twitter!
Copyright © 2012 Jamaica Observer. All Rights Reserved.
Terms under which this service is provided to you.