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.

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.

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.

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 the National Heath Fund (the best social programme since the National Insurance Scheme of the Jamaica Labour Party in the l960s) and the Programme for the Advancement through Health and Education which is to be extended. Both programmes need to cover far more people. Considerable sums of money have been used, or are being used on Highway 2000 and the Northern Highway.
Quick movement of goods and services are essential to economic development but the cost of travelling on the highways is excessive, and the people in many communities cannot drive to them because of the condition of parochial and farm roads. There needs to be greater transparency of expenditure on the highways.

People tend to blame only the finance minister for the state of affairs, but I sympathise with him. It seems that the government has not yet fully grasped the importance of production of goods and services to economic growth. Those responsible should be pushing much harder for increased production and productivity by workers to achieve a growth rate of at least six per cent annually, as happened in the l960s under the JLP government, instead of apparently being satisfied with three per cent. That level of growth would give the finance ministry more room to manoeuvre without having to breach the constitution. The government should not take comfort in the recent IMF report on the economy which has some favourable aspects on the economy but should be used as the foundation for a greater thrust forward.

One more thing, and this is a serious matter. Dr Davies should not play political games with the economy. He should have learnt his lesson from events in 2002 when he overspent because of the general election and created a deficit from which Jamaica has not yet fully recovered. What worries me is that the finance minister does not seem to be unduly concerned about the heavy debt burden and the increasing cost of loans. He will continue to borrow if the government remains in office. If there is a change of government, that will be the terrible millstone which the new government will have to bear. Dr Davies should consider the matter in terms of Jamaica's well-being in the future. And he should remember that the main objective of economic planning is to create the conditions for wealth for the social development of the people.

Feeding the multitude

DANGEROUS PETS

Pepper Pot