Tuesday, May 05, 2009
Apart from the effects the global economic recession is having on Jamaica, the country's gravest problem is not producing enough goods and services to ensure economic stability and viability, yet it wants to enjoy a high standard of living mainly through borrowing upon borrowing.
All the statistics on the economy released by Finance Minister Audley Shaw in his 2009-2010 budget presentation point to the need for Jamaica to produce far more goods and services in order to survive, especially in the current world economic environment. The Gross Domestic Product is the most important barometer for measuring economic stability, in that it measures the value of goods and services produced by a country. If a country is not producing sufficient goods and services to maintain a level of economic and social stability, it cannot be said to be doing well. Jamaica is not doing well and has been borrowing money to survive instead of producing to survive.
The debt ratio to the GDP is staggering. At the end of March this year the ratio stood at 108.9 per cent. In actual figures, we owed $1.2 trillion dollars and we are still borrowing. Of a budget of $555 billion, $309 billion had to be reserved for debt payments. Under law, the first charge on the budget is debt servicing.
The expected revenue for the fiscal year will be $321 billion. Government will have to borrow $215.8 billion and impose $18.131 billion in taxes or 1.5 per cent of GDP to close the fiscal gap. The major portion of the revenue will come from an increase of $8.75 per litre in the Special Consumption Tax on petrol which is estimated to yield $13.3 billion, and broadening the General Consumption Tax (GCT) estimated to yield $7.5 billion. It has been widely recognised that the government has no other option but to increase taxes although the level of the increase in petrol prices and some of the items added to the GCT basket is being questioned. For example, it includes computers and books. This is unacceptable.
Some economists wanted the government to cut its spending, but others argue to the contrary that, like President Obama's administration, government should increase spending, give the economy a stimulus injection, especially in infrastructure development and create better conditions for increasing goods and services to improve the GDP standing. Hence this year 20 per cent of the intake from the SCT on fuel will be used on road rehabilitation, 35 per cent next year and 50 per cent in year three. There is also money for capital development, but many more incentives will be needed to enhance production appreciably. When Prime Minister Bruce Golding speaks in the budget debate today he is expected to announce other incentives to raise the level of the production of goods and services.
In his landmark contribution to the debate last Tuesday, Opposition spokesman on finance, Dr Omar Davies, proposed an economic recovery programme for national growth which would see an additional $6 billion added to the budget for capital programmes, including infrastructural works like draining, river training, reforestation and building retaining walls.
The programme, he said, could be financed by withdrawing $3 billion from the Universal Acess Fund and the Tourism Enhancement Fund. He suggested a tax regime which could result in the rolling back of the tax increase on petrol. Many people are calling Dr Davies' contribution as the most statesmanlike speech he has ever made in a budget debate, including those he made during his 14 years as minister of finance.
But to return to the importance of having a strong GDP. The fiscal deficit this year is targeted at 5.5. per cent of the GDP or $65.4 billion. Such a deficit is much too high for a small economy and shows that the country is living well above its means and has to increase its income considerably. The internationally accepted safe point is 3 per cent of GDP. We cannot compare our position with that of a large country like the United States which has a large economy and can cope with the problem better than a small country like Jamaica. Their deficit is running at about 8 per cent of the GDP. Another figure we have to watch is the current account deficit which, for the financial year just ended, was 19.2 of GDP, a deterioration of 3.9 per cent over the previous year.
As usual, government gives "a little something" to soothe taxpayers whenever it imposes taxation. It was a good decision to take the tax burden off PAYE employees. There are 1.3 million workers in the labour force of whom 323,000 are PAYE workers. For the workers, the income tax threshold is to be doubled from $220,500 to $440,000 by January 1, 2010, which means that an additional 85,000 people will no longer pay income tax, bringing the total to 132,000. Some 191,000 workers will take home an additional $55,000 per year. But there are nearly a million other workers outside the loop who are going to feel the bite of the tax increase on petrol. So when journalists asked Finance Minister Audley Shaw at his press conference whether the government would be considering increasing the fares charged by taxi operators, Shaw seemed upset by the question and referred the journalists to Transport Minister Mike Henry. It was a perfectly legitimate question, because in the past price increases in petrol have caused unrest as taxi operators passed on the increase to commuters.The truth is that the government should have discussed the matter with taxi operators before the tax and established a position prior to the announcement.
Another matter of concern is that up to the time of writing this column the additional list of items to attract GCT had not been completed. It seems to me that the list was put together hurriedly. When GCT was introduced during the Seaga administration in the 1980s, as communication consultant to the Revenue Board which was compiling the list, I noted that it took the team several weeks working long hours to prepare the list of items, including those which were zero-rated.
http://www.jamaicaobserver.com/columns/html/20090504T220000-0500_150776_OBS_PRODUCING_TO_SURVIVE_INSTEAD_OF_BORROWING.asp
Tuesday, May 5, 2009
Sunday, May 3, 2009
SOLUTION -Lessons from the 70's by Esther Tyson
Lessons from the '70s - Now our fear is global recession. Esther Tyson
Jamaica Gleaner Online
Lessons from the '70s
Published: Sunday May 3, 2009
Rice wars, flour wars, empty supermarket shelves, scarcity of goods, five flights a day to Miami, mass migration, emptied houses and captured houses.
This picture describes Jamaica in the period of the 1970s. We have lessons to learn from this time. Those among us who were not yet born need to learn from those of us who were here. These times with which we are faced are similar yet different. In the 1970s, the USA became the land of hope and promise for many Jamaicans. Stories are told of many Jamaicans who left their good jobs here to go abroad to serve at a gas station; some who left their comfortable homes to live in substandard housing in order to escape the fear they had of living in Jamaica.
This time, escaping Jamaica will not find us leaving our fears behind, because it is no longer an isolated situation belonging to Jamaica - it is worldwide. In the 1970s, the fear for many was that Jamaica was being transformed into a communist nation. Now our fear is global recession. Therefore, it makes no sense to run elsewhere to escape this fear; instead, we have some lessons to learn from that period on how to survive this recession.
Feeding ourselves
We need to find a way to feed ourselves. We need to teach our children how to grow their own food. Backyard gardening needs to become a way of life for those of us who have backyards. Those of us without backyards need to do container gardening.
At our school, we used to have a number of students doing agricultural science up to the CXC-CSEC level, but then the interest in the subject declined. Over the last few years, however, the students' interest in the subject has been revived. Students are transferring the knowledge learnt about gardening at school to their homes. More of our schools need to engage our students in the rudiments of knowing how to grow their own food.
In addition, we need to find ways to share the excess that we reap with others. We can do this by organising in our communities, or at work or at church, to determine who will be growing what at each growing period and then do an exchange with each other, so that nothing goes to waste.
Accessing reasonably priced dry goods
With regard to accessing reasonably priced dry goods, we need to find the wholesalers who are offering good prices for their products. We could again, in our groups, buy these goods wholesale and divide them among ourselves.
Instead of buying high-priced meats at the supermarkets, we need to find a source, possibly the market, or else a butcher where we can get it at a price more reasonable than is offered in the supermarkets. If we have to travel to a rural area to do so, this could be done even once a month, and again the group would cover the cost of the transportation. This could work out, even with the cost of gas, to be cheaper than buying in the supermarkets. In addition, we need to eat less meat and add more vegetables to our diets. In any regard, it is a healthier option.
With the price of petrol being hiked by the new tax, persons need to again use the strength of community to assist each other. We need to look at carpooling. If your neighbour's children go to the same school as yours, or if you work in the same area, arrange that you share the job of transportation. Half of the week you drive, the other half the neighbour drives. In the '70s, the gas guzzlers on the roads became a thing of the past. Those of us who are now purchasing vehicles need to look at the mileage that the vehicles offer per litre of gas as a criterion for buying them.
Furthermore, we need to learn to be satisfied with less and we need to 'tun our han mek fashion'. In an effort to conserve, we need to seriously look at recycling. Containers bought with one item can be reused to store other dry goods, etc. With regards to our clothing, we would save money if we remove worn collars and sew them back on the reverse side instead of discarding the item of clothing.
There are many other such ways that we can cut back on expenditure. The Jamaica Public Service gives tips to the country as to how to conserve on the use of electricity. Let us implement these in our daily lives.
A sense of community
What I am saying is that in these difficult times we need to develop a sense of community. We need to learn to depend on each other and support each other. That community can be geographical or it can be an organisation or your workplace. If you are one of the fortunate ones who are not affected negatively by this global meltdown, then you can help others in your community who are less fortunate.
Those of us who were here in the 1970s, and who survived in spite of the economic difficulties that the country experienced, need to share with others how we did this.
As the well-known song says, "No man is an island, no man stands alone, each man's joy is joy to me, each man's grief is my own. We need one another, so I will defend, each man as my brother, each man as my friend."
Esther Tyson is principal of Ardenne High School, St. Andrew. Feedback may be sent to columns@gleanerjm.com. Copyright Jamaica-Gleaner.com
http://www.jamaica-gleaner.com/gleaner/20090503/cleisure/cleisure5.html
Jamaica Gleaner Online
Lessons from the '70s
Published: Sunday May 3, 2009
Rice wars, flour wars, empty supermarket shelves, scarcity of goods, five flights a day to Miami, mass migration, emptied houses and captured houses.
This picture describes Jamaica in the period of the 1970s. We have lessons to learn from this time. Those among us who were not yet born need to learn from those of us who were here. These times with which we are faced are similar yet different. In the 1970s, the USA became the land of hope and promise for many Jamaicans. Stories are told of many Jamaicans who left their good jobs here to go abroad to serve at a gas station; some who left their comfortable homes to live in substandard housing in order to escape the fear they had of living in Jamaica.
This time, escaping Jamaica will not find us leaving our fears behind, because it is no longer an isolated situation belonging to Jamaica - it is worldwide. In the 1970s, the fear for many was that Jamaica was being transformed into a communist nation. Now our fear is global recession. Therefore, it makes no sense to run elsewhere to escape this fear; instead, we have some lessons to learn from that period on how to survive this recession.
Feeding ourselves
We need to find a way to feed ourselves. We need to teach our children how to grow their own food. Backyard gardening needs to become a way of life for those of us who have backyards. Those of us without backyards need to do container gardening.
At our school, we used to have a number of students doing agricultural science up to the CXC-CSEC level, but then the interest in the subject declined. Over the last few years, however, the students' interest in the subject has been revived. Students are transferring the knowledge learnt about gardening at school to their homes. More of our schools need to engage our students in the rudiments of knowing how to grow their own food.
In addition, we need to find ways to share the excess that we reap with others. We can do this by organising in our communities, or at work or at church, to determine who will be growing what at each growing period and then do an exchange with each other, so that nothing goes to waste.
Accessing reasonably priced dry goods
With regard to accessing reasonably priced dry goods, we need to find the wholesalers who are offering good prices for their products. We could again, in our groups, buy these goods wholesale and divide them among ourselves.
Instead of buying high-priced meats at the supermarkets, we need to find a source, possibly the market, or else a butcher where we can get it at a price more reasonable than is offered in the supermarkets. If we have to travel to a rural area to do so, this could be done even once a month, and again the group would cover the cost of the transportation. This could work out, even with the cost of gas, to be cheaper than buying in the supermarkets. In addition, we need to eat less meat and add more vegetables to our diets. In any regard, it is a healthier option.
With the price of petrol being hiked by the new tax, persons need to again use the strength of community to assist each other. We need to look at carpooling. If your neighbour's children go to the same school as yours, or if you work in the same area, arrange that you share the job of transportation. Half of the week you drive, the other half the neighbour drives. In the '70s, the gas guzzlers on the roads became a thing of the past. Those of us who are now purchasing vehicles need to look at the mileage that the vehicles offer per litre of gas as a criterion for buying them.
Furthermore, we need to learn to be satisfied with less and we need to 'tun our han mek fashion'. In an effort to conserve, we need to seriously look at recycling. Containers bought with one item can be reused to store other dry goods, etc. With regards to our clothing, we would save money if we remove worn collars and sew them back on the reverse side instead of discarding the item of clothing.
There are many other such ways that we can cut back on expenditure. The Jamaica Public Service gives tips to the country as to how to conserve on the use of electricity. Let us implement these in our daily lives.
A sense of community
What I am saying is that in these difficult times we need to develop a sense of community. We need to learn to depend on each other and support each other. That community can be geographical or it can be an organisation or your workplace. If you are one of the fortunate ones who are not affected negatively by this global meltdown, then you can help others in your community who are less fortunate.
Those of us who were here in the 1970s, and who survived in spite of the economic difficulties that the country experienced, need to share with others how we did this.
As the well-known song says, "No man is an island, no man stands alone, each man's joy is joy to me, each man's grief is my own. We need one another, so I will defend, each man as my brother, each man as my friend."
Esther Tyson is principal of Ardenne High School, St. Andrew. Feedback may be sent to columns@gleanerjm.com. Copyright Jamaica-Gleaner.com
http://www.jamaica-gleaner.com/gleaner/20090503/cleisure/cleisure5.html
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