Does it get better than no new taxes?... It just might

The Maiden voyage is the first time a vehicle, especially a boat or a ship, departs on a journey. so by extension, the first time one experiences or goes through something. Thursdays March 7, represented the maiden Budget presentation for Dr. Nigel Clarke as Jamaica's minister of Finance. 

With less than a year under his belt in the job, the country is beginning to experience a new type of Finance Minister one who is qualified for the job who appears for the most part not to be marred by the rhetoric of politics but still hold true to his private sector roots. 

A Native of Kingston, then later Bluefields in Westmoreland, he describes himself as "Though of urban birth, I was blessed with a rural and seaside upbringing". A fellow Munronian, UWI Alumni as well as Jamaican Rhodes Scholar. He has had a career in business and finance for over twenty years in Jamaica, The United and United Kingdom. Nigel Clarke is son on whom Jamaica is proud. 

To move on from my admiration of the Minister, whom I have met both before and after he became minister we can now focus on his presentation and tenure this far. 

The Theme of the presentation was GROWTH WITH EQUITY, where he focused on three key anchors 

• Economic Independence

• Economic Opportunity for All

• Protection of the Vulnerable

Economic independence means that we as a country are empowered to chart our economic destiny, to set well-thought-out economic priorities, and to provide the framework, rules, and environment that will allow our citizens to freely pursue economic activities in a way that promotes growth and well-being for all.

Economic independence does not mean a withdrawal from the global economic and financial system. It does not mean that we cannot benefit from external financial flows, technology, and know-how. But it does mean that we responsibly take our destiny into our own hands. 

Economic Opportunity for all refers to social goals for all members of society that help people to thrive, such as better access to water, food security through agriculture and greater access to financing for MSME's. Economic opportunity for all includes human capital development through suitable education facilities and more affordable access to education at all levels. Greater access to funding for startups and BPO upskilling as well as funding for research and development

Protecting the poor and vulnerable during this period of transformation of the Jamaican economy is critical to ensure the viability of the economic reforms for future generations. as the poor are the most vulnerable to economic shocks, here the allocations to PATH program have been increased and the net has been widened to focus not just on meeting physical needs but to invest in the development of the beneficiaries. The economic program also seeks to create, upgrade and relocate housing for poor and vulnerable communities. There are also provisions forsShelters, the citizen security, and justice program as well as improved benefits to persons with disabilities, Minimum wage earners and pensioners. 

All of these initiatives that are aimed at making the growth process equitable and inclusive complement our other initiatives focused on moving Jamaicans 36 from poverty to prosperity. Increasing access to financing for all, new public and private opportunities for micro-credit, credit union reform, pension reform, small business support all provide avenues for everyone to participate in the growth prospects in Jamaica

The big news, however, is always what are the revenues measures, this year for the first time in over 20 years, the government of Jamaica is giving back potential revenues in the form of a tax stimulus.

 

The type of taxes that the stimulus encourages more transactions, investments in small businesses, more home ownership and better compliance with the rule of law as government should not be a hindrance to transactions. 

The government was able to achieve this stimulus by a reduction in the primary surplus target from 7% of GDP to 6.5% of GDP. 

While the tax cuts will not help everyone directly the indirect results could be far better.  Greater investments in small business and real estate, ass well as reductions in business taxes and GCT threshold hold translate to more employment, more spending, more taxes, and more growth. 

As an economist, I fundamentally believe in an economic system with private sector lead growth. This means that the government must create a framework in which it is attractive for private businesses to thrive. Over the past few years with reforms from both governments we are now experiencing low and stable inflation, a predictable two-way movement in foreign exchange, low-interest rates, a strong equity market, steady economic growth, and historically low unemployment. 

All indicators of a healthy economy 

#CollegeEconomist