Published: Tuesday | June 5, 2012  

Source:  http://jamaica-gleaner.com/gleaner/20120605/cleisure/cleisure3.html

Kevin O'Brien Chang, Contributor

Peter Phillips' Budget speech accepted Jamaican and international realities - the cupboard is indeed bare! Yet it's possible to do the right thing in the wrong way, as the angry public reaction is proving. When both the poor and rich are bashing you, something is amiss.

A better approach would have been to adopt the Private Sector Working Group's (PSWG) tax-reform package wholesale. There would still be lots of bawling, but voters would at least feel there is a thought-out plan behind the hardships they're being asked to bear. The Gleaner, the Private Sector Organisation of Jamaica (PSOJ) and the PSWG would surely support such a move. The Jamaican dollar and Jamaican bonds would likely strengthen. And Peter and Portia could simply say to business sector critics: "Go quarrel with Missa Matalon, 'cause a fi him plan!"

(Poor Joseph Matalon! To devote so much time and effort into coordinating a tax-reform package that would benefit the entire country while making the less fortunate better off, and then to be castigated as an enemy of the poor! But buck up, Joe. You are doing your patriotic duty.)

The PSWG tax-reform package is exactly what the country needs. It's hard to imagine a more comprehensively thought-out programme that manages to achieve desired national goals in so relatively painless a manner. It's also fully in step with international taxation trends.

Not perfect but ...

If implemented as recommended, it would achieve three crucial things:

1) Redistribute - the rich would pay more and the poor would pay less.

2) Reduce corruption - removing all GCT exemptions would dramatically lessen opportunities for 'bandooloo-ism'.

3) Spur entrepreneurship - decreasing direct taxes on businesses would stimulate job creation and growth.

It's not perfect - nothing ever is. But it's likely better than anything else we can come up with. To cherry-pick will mean spending months and years coming up with solutions which will - as the Phillips Budget is vividly demonstrating - very likely be worse. That potentially wasted time and energy should be spent on other critical areas, like public-sector reform.

To be frank, Dr Phillips' selective tax package is not very smart economics and, as the vexation on the streets is showing, very stupid politics.

But it's not too late. Prime Minister Portia Simpson Miller can once again pull a rabbit out of the hat by coming back to the people and saying, "I hear your cry and so we are reducing the GCT on everything from 16.5 per cent to 12.5 per cent and expanding PATH to help the poor. On reflection, for the greater good of the country and since I always put the poor first, I will implement reforms that will make the social network bigger and lessen the suffering of the unfortunate. Yes, some will lose a little, but they will get back much more. We minusing one but we plussing two!"

Chance to turn tide

There would still be some anger, but rather less than now. So many promises have been broken that going back on the 'no taxes on basic food' utterance would hardly be noticed. The Gleaner and PSOJ and Jamaica Labour Party, etc., would certainly have no choice but to support her with loud applause and hurrahs for such a 'shining act of stateswomanship'.

Opposition Leader Andrew Holness - who gave an excellent Budget speech, in substance and style - would probably claim credit for pointing her in the right direction, and no doubt accuse the People's National Party of 'hypocrisy' and 'being confused' and 'making U-turns'. But talk is cheap, and no matter how it comes about and who does it, all that matters in the long run is that the right thing is done for Jamaica.

If Sista P lick back with a shot like this, she will have shown herself to be the sharpest politician in the land. If she 'leggo' the PSWG tax-reform package as is, all her detractors will have to cease and settle! Not poison at all but the right medicine all the expert doctors recommending! And since it will be sweetened by expanding PATH, it nah taste so bitter at all!

So come on, Portia, show them what you are made of!