ON Tuesday, opposition leader Andrew Holness addressed the Jamaica Chamber of Commerce (JCC) board meeting on the issue of the Jamaican dollar and tax reform. He argued that while he was familiar with the economic arguments for devaluation, such as the need for the internal “rebalancing” of the economy, and admitted that “in the future it may be necessary”, he didn’t think such a policy should be pursued now.
He described “the policy of devaluation as poisonous to the Jamaican economy at this time”, and part of a “tacit agreement” with the IMF.Holness suggested that so far the Opposition had behaved in a responsible way, rather than “oppose, oppose, oppose”, so as to “avoid disruption”. Stating that in the context of the IMF deal, Jamaica’s “political climate was ripe for reform”, Holness assured that he “will support good policy”, but oppose bad policy.Addressing the issue of tax reform, Holness stated that “had we won the elections, we would have implemented comprehensive tax reform”, emphasising that in Opposition, “we took the risk of supporting comprehensive tax reform”, including supporting the position of the Private Sector Working Group on a uniform rate of GCT at between 10 to 12.5 per cent. He argued that the “unabated slide in the Jamaican dollar” since the election had been much more detrimental to the poor, and destructive to people’s standard of living, than a universal GCT, particularly as any such proposed reform should include increased social protection measures. In addition, in his view, there had been no compensating social protection measures to offset the slide in the dollar.Describing tax reform, Holness argued “in the hands of a butcher, it will kill you”, but “in the hands of a surgeon, it will save you”. Holness suggested that taxation was a very important signalling mechanism, and that he had reviewed the past two budgets, and couldn’t find one signal for investment. When in office, he said, the JLP had reduced transfer taxes, stamp duties, and removed the tax on dividends, as well as reducing some customs duties, and had planned to continue on a programme to reduce and unify some duties. In contrast, he said, the current government had just increased taxes.He was unapologetic in suggesting that the JLP stood for a Jamaica First position on Caricom, stating that he didn’t believe that one can have a strong Caricom with a weak Jamaica. He revealed that the JLP was still assessing this issue, and “that at a later stage will make statements on its position on Caricom”. His starting point was that Jamaica should seek true implementation of the treaty, meaning seeking remedies to deal with goods coming from outside the region but masquerading as Caricom imports and therefore coming in duty-free.Stating that “Economic growth must be private sector driven”, Holness argued that because Government accounts for about 70 per cent of procurement, a very important measure that would help private sector growth would be to pay suppliers for goods and services on time, preferably between seven and 14 days. “That simple action alone by Government committing to clear its bills on a timely basis would speed up the velocity of transactions in Jamaica. It would do miracles in improving access to credit”.Holness finished by arguing that he wanted to “unleash Jamaica as the next Singapore”. While arguing that it was positive that the society was strong enough to work together in a collaborative way to ensure that we have a successful economy and recover from serious recession, he observed that “in speaking to the different sector groups, that there is also a sense of uncertainty as to whether the sacrifices made both by workers and business will actually bear fruit”.In the question and answer session, he argued that we “don’t have the luxury of time anymore”, referring to the correct sequencing between tax reform and devaluation. He also observed that in the long term, it was his view that education was the most binding constraint on growth, even above, say, energy and access to credit. Jamaica doesn’t have oil, or a plethora of natural resources, so “Jamaica’s people is its oil”. For this reason, he had resisted the move to take away teachers emoluments, and teachers had got one of their largest increases under the former JLP government. He cited the example of when he was Minister of Education, a major business process outsourcing firm had wanted to hire 20,000 people. However, due to our low education standards, they told him that they had to interview 100 people to get 10. Finally, he observed that the JLP was forming an export strategy committee, to focus on how to increase exports.Opposition Leader Andrew Holness (right) addresses the Jamaica Chamber of Commerce (JCC) board meeting on the issue of the Jamaican dollar and tax reform. Looking on are JCC vice-presidents Catherine Kennedy and Warren McDonald. (PHOTO: ASTON SPAULDING)View the original article here
Holness speaks to JCC on dollar slide and tax reform
