FINANCE and the Public Service Minister Dr Nigel Clarke has declared that the $18-billion tax breaks he announced Tuesday represents “a moral imperative” and doesn’t constitute an election budget.

He was adamant that his motivation for the tax breaks has nothing to do with political capital, but rather to be a good steward of the national treasury.

Dr Clarke was responding to questions from the Jamaica Observer at his post-budget debate news conference at the ministry’s Heroes Circle headquarters, yesterday. He was asked to respond to political pundits, who are already saying that the tax breaks represents an election budget with the tax concessions, timed so well with the general election anticipated within months.

Clarke dismissed any assertion that the tax breaks have anything to do with any particular event (election). In seeking to justify the tax breaks at this time, the finance minister asserted that spending is being increased by 4.7 per cent overall and inflation for the fiscal year to January was about five per cent.

According to Clarke, “What we have proposed is a very responsible and prudent approach to expenditure, which is in line with inflation and by no means represents an expenditure profile that is connected to any event (election). In fact when one examines our budgets over the last few years and you look at the percentage of expenditure and so forth, you ask which year [is an election year], you could not tell. They are all prudent in their profile (expenditure),” Clarke said.

When asked specifically to comment on the tax breaks, rather than the expenditure profile, Dr Clarke emphasised that the tax breaks have come about in a context where there is the fiscal space for doing such.

“We are very clear about this fiscal space, which is arising from our policies to: (1) To reintegrate public bodies, where the opportunity exists; (2) To engage in liability management transactions; (3) The over-performance of the primary balance achieved over the past four years; and (4) the divestment of public assets and listing of those assets on the stock exchange.

He was quick to point out that the administration has been signalling its intention of giving back to taxpayers, making reference to last year’s removal of certain discretionary issues. Clarke reminded journalists that when he announced the removal of the discretionary taxes last year, he advised the nation that once the Holness Administration was able to reduce more taxes this would be done, once the conditions were right.

The minister said that having raised $185 billion in taxes last year, he sees the reduction in General Consumption Tax (GCT), in particular as “a moral imperative” in giving back a little to taxpayers. This, he said, is particularly so, since the Government will be embarking on its aggressive debt reduction programme when it plans to pay out to creditors as much as $73 billion next fiscal year.

Dr Clarke emphasised that the best way of giving back would be the GCT reduction, which represents the broadest means of a tax break, considering that all the other taxes are narrow and doesn’t benefit all.