Now I am really going to be cheeky here.
Over the weekend the Minister of Financial Ruin ( Sorry Finance) announced at a rally for comrades, that there are persons out there who does not have the interest of the country at heart and are trying to derail or sabotage the IMF program. He went on to further suggest that he will NOT be stopped and he will pulling out all the stops to take the NHT contributors money, because it was essential to the success of the IMF agreement.
He said he will be willing to take a bill to parliament to amend the NHT act to make what would have been an illegal act, now legal.
There was thunderous applause to this by those in attendance.
Now Peter had just told them the following .
- I don’t care what you all think and say, I am going to get that money.
- You may have to pay higher interest rate on existing loans and I know things are tough with you all, but I don’t give a damn, I am going to take the money anyway.
- Your refunds, which you would normally get after 7 yrs of payment, you may no longer be able to get, but I don’t care I am going to take the money anyway.
- Approx 11,000 poor and middle-income Jamaica will not get any houses over the next 4 yrs, but I don’t care, I am going to take the money anyway.
- You employed us to make tough decisions, you all bawled for this agreement, this is your sacrifice to national development, the $45b is good for Jamaica
Sometimes its not what you do , but how you go about doing it.
The JLP we were told, was faced with the exact same issues in 2009 and went after the funds, but were told by then Solicitor General that it was an illegal act and they abandoned the idea.
http://www.jamaicaobserver.com/news/JLP-did-not-raid-the-NHT–says-Chang
http://jamaica-gleaner.com/gleaner/20130226/lead/lead6.html
Mr High and Mighty “Bragadocious” will not listen and has decided that based on “sound legal” advice, there was nothing preventing him from taking the money. This advise we presume came from the offices of the attorney general, who himself is a member of the very party he is seeking to advise.
The JLP had changed this after the dudus affair, because it was the right thing to do and here comes along he PNP to revert to what was proven to be an untidy state of affair.
Now it turns out that the AG advise was not so “sound and legal” after all and so the Minister of Finance has gone to parliament to rush through a amendment to the bill in record time.
This no doubt is proof that the government can move at a fast pace if they so desire and its SHAMEFUL that after 3 yrs ” ANTI -GANG and DNA LEGISLATION” are still in limbo, even though the entire country ( or do they), believe that these pieces of legislation can put a serious dent in crime conviction and subsequent reduction.
NO ALTERNATIVES.
Once one says there are no other alternatives, we have effectively ensured that none exist, simply because we have closed our minds to the other possibilities and so we will not find any such alternatives that may exist.
Former PM Bruce Golding who has remained quiet for the most part has stepped into the fray and provided an alternative to the ” no alternative” path that has been presented. While I have not delved too much into what he has said , I will present it here without comment for the readers.
http://www.jamaicaobserver.com/news/That–44-billion-NHT–contribution-_13733759
Has this issue been politicized, certainly, that is the nature of the Jamaican environment. The issue has become one of those issues where illegal vs legal action has given way to one of , those against the move are trying to sabotage the government and are JLP activist. Mind you some maybe, but its a dangerous thing to suggest, if you disagree then you are an ” enemy of the state”.
The debate has now moved from the main issue which is one of a legal issue to one where the for and against are based on party affiliation. 😦
Courtesy: Jamaica Gleaner
Filed under: Uncategorized |
Warren's Blog 
So his suggestion is, in two weeks, survey thousands of hectares of land (how much is suitable for housing development?), force NHT to buy it and not be able to develop it. NHT would then sit at look at the land.
NHT was created because the average Jamaican was too poor to afford financing for housing. The average Jamaican is still too poor. Its another chicken or the egg scenario. For 50 years we have been dealing in chickens, its the EGG, its the EGG!.
This is the easiest cop-out. We need tax reform and pension reform within 12-18months. We should not extract more than 2 years from NHT.
Guest 101.
We have been negotiating for 13 months ! Don’t forget that.
If they had been true to the ppl of ja and ask for alternatives they could have been offered some.
We always seem to want to choose the easy way out and forget about the long term impact.
Jdx was easy, it failed
Ndx was easy, it too will most likely fail
Raising taxes is easy, that has failed for the most part.
Why, no plan to go along with the state actions.
Most lotto winners are broke in 5yrs or less despite the size of their winnings, why ?
No plans to deal with the financial wind fall .
Sent from my BlackBerry® wireless device from LIME.
From my viewpoint, both governments pursued the (pension & tax) reforms, they are still incomplete. Both governments tried huge tax packages and learnt the effect was plastic, i.e. we have reached the limit (esp PAYE).
Pension reform is in the courts and tax reform means being out of a job in a few years. Plus we have not been able to learn that everyone should pay tax. The NHT was the “last resort” cop-out. It is a bail-out, but we still continue to live above our means.
We need to suffer for that $45B in some other way, our economy does not have the base to produce $45B from growth in 4 years. Our politicians still think the same, pump back every gain in deficit via social programmes and growth will fall from the sky. Build some big stuff and growth will fall from the sky.
We would love to hear that we don’t need the IMF or NHT money, but the simple truth is we cant afford the clothes on our back (as a nation). The great panacea, cost of electricity will not fall significantly in the next 4yrs. We still need to CUT. If we go on believing that we are OK, we will resist the cuts. Most actions by both governments in the last 4 years have been do-or-die actions. Wait till you hear the budget and the practical elimination of waivers.
Jon presented some good links, where the professor has suggested spending cuts vs taxes increases.
I cannot remember the links now but its on the website.
NHT is now the panacea, without it we are DEAD.
This is so because we refuse to curb our wild spending !
4yrs from now when the NHT is broke we will go after the TEF and then the Port Authority of Jamaica.
When nothing is left to take money from to support our insatiable appetite to spend, then what.
We have been here before as I said. Jdx1 was the only game in town.
Now NDX and NHT are the only games in town.
Soon JDX#3 will be the only game in town.
We will still retain our breakfront
We will still keep all those workers who we cannot afford to pay and many who are not contributing.
We will still keep our many consultants who are high paid and who we cannot tell what they are doing.
We will still give politicians free housing and free cars that we cannot afford.
We will still rent high priced offices that we cannot afford, while keeping lower cost goj buildings empty .
The point is there must be concrete actions to work in tandem with the tax and other measures that the GOJ have or are looking at implementing.
Come friday $3.50 goes on each litre of fuel !
What’s the likely impact ?
Guest you have made some good points and I am listening. Oh I wish those who disagree with us would also listen to dissenting views.
Sent from my BlackBerry® wireless device from LIME.
The links you speak of are found in this post:
https://commonsenseja.wordpress.com/2013/02/20/bulgaria-govt-resigns-over-austerity/
And it isn’t just spending cuts vs. tax increases; it is spending cuts AND tax cuts (austerity that works) vs. spending cuts and tax increases (the balanced approach austerity that does not work).
A rough program I would think of which might work would be to:
– go back to the previous system on education and health care. We really can’t afford it and should stop pretending that we can. Those who cannot pay should not have to pay, but if you can afford to pay then you should until the country’s tax base can facilitate universal free healthcare and education (note that a number of places with universal healthcare coverage did not start out that way. Universal healthcare coverage was first seen in Canada (and then only in one province) in 1946. Canada was formed in 1867. A similar time frame would not see universal healthcare in Jamaica before 2041 but the aim should be to get it and universal free education introduced well before that).
– allow cuts in the public sector by not filling positions opened up by retirement and encouraging public sector workers to start their own businesses, perhaps with tax concessions to sweeten the deal
– cut the provision of free housing for all government personnel. If they lived in squalour before they should live in squalour until they can afford to take themselves out of squalour. Government personnel could be given concessions (say a 15% concession on purchasing a house or property) on housing, but that is all.
– cut the provision of free vehicles for all government personnel. government personnel could be given a concession on purchasing vehicles (and these vehicles have to meet certain emission and price requirements), but that’s it.
– cut taxes (which should act as a stimulus). Reduce GCT to 12.5%. Remove the SCT on fuel, or at least stop the effective double taxation of fuel and power where it is taxed before it is refined and then taxed at the pump AND where it is taxed with GCT before it is used by JPS and then the power generated from this fuel is taxed with the same GCT. In effect it would be giving JPS major tax concessions, but this should be coupled with legislation forcing JPS (or any other power, fuel or energy company) to pass on the savings of ANY proposed or future tax cuts to consumers (failure to do so should result in a revocation of a licence and/or fines and the the threat of retroactive taxes on the profits made in breach of the law).
– reduce the size of the parliament from 63 to 59.
– cut the size of the cabinet and cut the pay of all parliamentarians by say 5-10%.
– continue with the program of making street lights solar powered
– carry out a Digital Drive in order to cut the expenses of all the paper used in government business
– can’t think of any more off the top of my head, though I’m sure others here can.
At the same time the government while decreasing spending and taxes can actually increase revenue from people who have been cheating the system (and thereby increase revenue AND cut taxes at the same time):
– the traffic ticket amnesty brought in a windfall of money from previously unpaid traffic tickets. Something similar should be done for taxes on a broad scale and for a extended period of time.
http://jamaica-gleaner.com/gleaner/20090816/lead/lead5.html
http://jamaica-gleaner.com/gleaner/20090727/lead/lead1.html
http://jamaica-gleaner.com/gleaner/20080806/lead/lead10.html
http://www.jamaicaobserver.com/columns/How-the-Gov-t-can-raise–1-8-billion-annually-without-taxing-a-single-Jamaican_8725663
At the same time cut expenditure on tax cheats. If you are proven to have been cheating on your taxes you should progressively lose access to government programmes paid for by other persons taxes – such as passport issuance. The more you owe, the more services you are barred from until you pay up (and the these services should be progressively more important). It is ridiculous that a random sampling of 500 doctors in 2009 could find 400 of them not paying taxes. These aren’t unregistered, unofficial businessmen with stalls on the side of the street. These are people who either have private practices or work in government-owned facilities. These 400 should simply have their passports voided (void the passport number and transmit the information to the relevant agencies at ports both at home and abroad) and have to pay their back taxes in order to be eligible for the lifting of the sanctions.
If done correctly, the tax cuts, prosecution of certain high profile tax cheats, tax concessions to public sector workers voluntarily leaving public service and starting their own business, cutting the size of the parliament and pay for ministers and MPs, cutting the free housing and cutting the free cars and having solar powered street lights and the Digital Drive could outweigh the unpopular aspects of such a program in the popular consciousness.
Jon, you say, “Those who cannot pay should not have to pay, but if you can afford to pay then you should until the country’s tax base can facilitate universal free healthcare and education”. The question I’d like to ask is who do you think is paying for it now? Certainly it is the group whom you describe as “[those who] can afford to pay”. Do you think it reasonable to tax them to run schools and hospitals and then let everyone else (who didn’t contribute to said schools and hospitals) use them without paying while insisting that those who were taxed pay to use the facilities operated with their taxes?
Further you say, “allow cuts in the public sector by not filling positions opened up by retirement and encouraging public sector workers to start their own businesses, perhaps with tax concessions to sweeten the deal”. I think this idea while well intentioned is likely to have significant negative consequences which could outweigh any hoped for positive effect.
In particular the persons who are likely to leave the public sector by retirement or to start businesses are likely to be the sort of workers the public sector can least afford to lose. Coupled with the wage freeze we will simply be ensuring the public sector becomes even more inefficient and poor performing.
Persons on the verge of retirement generally have large amounts of institutional knowledge.They are the ones who know how to get things done in their organizations. The public sector workers likely to want to start their own businesses and commit to so doing are the most enthusiastic and self motivated of the workers. Finally, prolonged wage freezes simply encourages those best and brightest in the public sector to seek private sector jobs where they can be much better remunerated. Those who choose to stay wage freeze after wage freeze are likely to simply have no choice as they are not wanted by the private sector.
Ultimately, if the public sector is to be reduced in size then those workers who are contributing the least in comparison to their salaries should leave.
I love your last suggestion about relieving tax cheats of public services. The only question I would have is what about the tax cheats who are not Jamaican passport holders? Can we tell the fire department, JCF etc. not to respond to calls from their homes as well as our native tax cheaters?
EJ
1. The taxes collected now are insufficient to properly run schools and hospitals. That’s why schools have to charge auxiliary fees. What happens now is that we have “free” services but very low quality services.
Under the old system those who did not earn enough to pay income tax would have still gotten the benefit of these services because it isn’t their fault (unless they are tax cheats) why they don’t earn more than the income tax threshold. That’s how it works in most systems around the world – the genuinely needy are provided for.
2. For the cuts in the public sector I was thinking of for instance a situation where you have 3 secretaries being paid $100,000 each and one of them is due to retire. Normally a new secretary would be hired to fill the post. But instead they could require the other 2 secretaries to take over some of the duties of the retiree (i.e. increase their own productivity) and give both of them a pay raise to say $133,000 and keep the extra $34,000 as part of the budget to pay off the debt.
3. “I love your last suggestion about relieving tax cheats of public services. The only question I would have is what about the tax cheats who are not Jamaican passport holders? Can we tell the fire department, JCF etc. not to respond to calls from their homes as well as our native tax cheaters?”
No as fires can affect all persons including those who pay their taxes and live next door. But fire and police services are meant to protect society, not provide a benefit that you can do without. I can do without a driver’s permit and a passport. I cannot do without a fire service. So for those who do not pay their taxes they should have their driver’s licences suspended, their passports suspended, they should be barred from sitting exams if they are enrolled in a government funded educational institution or have a government scholarship, etc.
To elaborate further EJ:
Persons retiring generally do have a large amount of knowledge, but not filling their post when that person leaves is not going to result in the retention of that knowledge any more than filling their post with someone new is going to do the same, because in both instances the person retiring has already left and taken their knowledge with them. What tends to happen in the case of posts where a person has a lot of knowledge (say someone on a managerial capacity) is that their post gets filled by someone else in the organization who has acquired a similar amount of knowledge.
I’m not advocating that the post in question simply be left vacant, but that the duties of the post be transferred to other persons with existing posts where possible (i.e. rationalization of the public service). For instance if you have a manager and a deputy manager of post offices for each parish, perhaps it would be time to allow the managers to retire when they do and simply have a manager of post offices at the county level and in each parish you then have a deputy manager overseeing the management details specific to that parish and give the deputy managers a pay increase to reflect their new roles and save some money from eliminating 10 posts in the public service.
You do have a good point concerning the type of public sector workers likely to leave if one encourages them to start their own businesses. Thinking about it further, I would now suggest that:
– public sector workers be encouraged to perform in order to qualify for concessions on housing, purchasing a vehicle, further education, etc (as well as bonuses)
– public sector workers who do not perform and who do not qualify for these concessions and bonuses be left with the option of still being able to qualify for tax concessions on starting a business if they leave the public sector and decide to start their own business. And should perhaps have access to either free or discounted advisory services on starting up such businesses.
If the performance incentives are worth more (say $100,000 compared to $50,000) than the tax concessions for starting one’s own business then the smart public sector workers (the ones we want to remain in public service) and the hard working ones will remain and the ones currently leeching the system will be discouraged from remaining in the public service (no bonuses or concessions while their colleagues obtain the same) and at the same time encouraged to pursue another walk of life (getting tax concessions and free or cheap help on starting their own business)
As long as the bonuses and tax concessions overall (the $100,000 and $50,000) add up to less than was saved from the initial cuts in government spending (say $250,000) then the overall programme of expenditure cuts will be achieved and if executed successfully could see further cuts in government spending (from the movement of underperforming workers out of the public service).
If done right any government that does this should in theory see a net gain in revenue (from increased tax revenues as the economy grows and from the collection of unpaid taxes from tax cheats) even as they cut taxes and cut expenditure.
Now thinking further about the suspension of government services for tax cheats, I would think that overall the areas of service that could be suspended and have an impact without endangering people’s lives (in the case of fire) or endangering society (in the case of the police responding to calls) would be:
– the issuance (and continued validity of) of certificates, documents, deeds and licences. For example, driver’s licences, titles to land and property, (new) birth certificates, liquour/spirit licences, trade licences (such as practitioner’s licences for doctors, lawyers, etc), the NIS number, etc.
– postal services (your post office box is suspended – you still would be obligated to pay bills and so forth, but good luck receiving them; so the tax cheats would soon find that they are without light, water and cable….)
– the provision of lawyers assigned to you in your defence should you fail to hire one during a trial. So good luck in your trial as you are forced to defend yourself in court.
– intellectual property (if you dodge taxes then just as Antigua is able to sanction the US under WTO rules by temporarily ignoring US intellectual property rights then the government should be able to sanction tax dodgers by temporarily ignoring their intellectual property rights. So for example if a prominent artiste is discovered to owe millions in taxes the offending artiste could be offered a choice: pay up your taxes now (with a waiver on the penalties for late taxes) or see the government legally able to post any of your previously copyrighted material online for sale (at a special government website) for the duration of time necessary to collect money equivalent to the outstanding amount in taxes AND penalties. Failure to start paying outstanding taxes after the owed amount has been collected would result in the continuation of this policy so that any new material by the artiste would simply be posted on the site and be available for download to anybody in the world for a very small fee – you may not get a lot of local Jamaicans buying the content but global fans especially in first world countries, would probably flock the site in droves and purchase the material). In the case of intellectual property that isn’t in the form of media, it could be seized and auctioned off (e.g. paintings) or it could be produced without royalties being paid (e.g. in the case of patented material such as drugs or technology – this would apply to individuals and businesses).
Perhaps the increasing levels of sanctions should be in the form of postal services suspension, followed by suspension (and temporary barring of eligibility) of certificates, deeds, documents and licences and then sanctions on intellectual property and the suspension of the assignment of lawyers in your defence in a trial.
In this way the government would make back it’s money from tax cheats and stop spending money on services to tax cheats (as opposed to people who genuinely cannot pay taxes).
Great to hear from Golding. He has a pretty good grasp and sound understanding of the issues. I would suspect that the land agency should have the relevant info at their fingertips??
Read new thread, GOJ is considering what sounds to be the same/similar proposal.
While guest and Jay are correct that profligate spending as well as the civil service have to be cut. Let me be the first to point out the obvious with pithy lines: Timing is everything in life. Balance is even more important than timing.
First the context; 5 years of recession and now we have even more contractionary actions by the MOF in order to reel in the debt and reduce it to 100% GDP in about 5-7 years. That quite possibly means 5-7 more years of double-triple-quadruple dip recessions. Crime while trending lower is still too damn high. PAYE taxes are too damn high.
For the rest of this year i would leave the status quo with the civil servants and salary freeze, while implementing criminal and judicial reforms including establishing a business court.
For year 2 I would implement wide spread tax reform by laying out a schedule of lowered rates, 1 point per year over 5 years. That way you get the psychological effect upfront. At the same time I would pilot an omnibus bill to not only raise all criminal fines but to also keep legal, usury fees like licenses, food handlers, etc firmly bolted to the rise of inflation. I would also focus in on making Jamaica the easiest place in the world to pay taxes.
For year 3 we are either deciding to start cutting jobs now or else it going to be in year 5 which would be after the next election. Thus punting the job cuts more than likely to the next government! Why the cop out? Well if by year 3 the vaunted Logistics base is not under massive buildout and the economy is growing again..,which politician in their right mind is going to do something to contract the economy? We may want a politician like that but they don’t exist.
This article in the Gleaner May 15, 2011 – The National Housing Trust (NHT) says the J$600 million being set aside for the Government’s new foundation to help indigents and upgrade public institutions is from funds unclaimed for at 17 years.
http://jamaica-gleaner.com/gleaner/20110515/business/business3.html
http://jamaica-gleaner.com/latest/article.php?id=28606
Very interesting. I cant wait for the debate in parliament.
Duh! It was going to happen this way either by name or trade because the government will not be finding this money to pay back anytime soon. I call it loan, you call it land bank or swap, IMF calls it we getting the cash regardless. At the end of the day the NHT has the money that we need and it’s going to happen, but by all means put in all the necessary legal & regulatory framework. It wouldn’t be the worst thing in the world for the government to have to give up all the land it owns and get into more productive hands!
Where is truthlives, d man just quiet given that his party has moved to keep Jamaicans poor for a long long long time.
Its being said lots of comrades are angry and poorer that a year ago, but are too embarrassed to speak and clearly truthlives who was very vocal became quieter and quieter as his party continued to stumbled now he has gone mute 😦
Come back to the blog man, we need to hear from you. Not because things so bad, you should still speak.
I may be called a dunce, but I really can’t digest the long, long post them – can they be kept to short digestible length?
I think the NHT Board should resign – they acted without the duty of care required of fiduciaries.
I also think the Attorney General is giving political advice and not legal advice. He is, however, not the first one to do so.
This needs to stop and that is why the role of AG was moved under the last administration, but as usual in Jamaica we like keep things the way they were. Why did the PNP change what was put in place before ?
Bruce Golding’s letter in the media about the NHT is disingenuous and self-serving. Why did the not propose that route when he wanted to also raid the NHT while he was Prime Minister?
Now he comes giving the impression that the his so smart, and those with “nine day memories” filling up the newspapers with comments about how bright the is – he is bright, indeed – for the same reason why he is not Prime Minister.
Why is it that our politicians (on both sides) have all the right answers when they are not in government?
The question is , does the idea makes sense?
That is point to debate.
We could very well argue that PSM said she had all the answers, but now we are wonder what questions she had the answers for.
Certainly she would have received an F.
But to the real issue, is it workable and if so will the GOJ pursue it ?
But he did raid the NHT, he is still unable to be truthful. See my links above.
I guess, you were out. He did NOT raid the NHT on advice from the then Solicitor General. Douglas Leys was interviewed on Nationwide recently and he said he advised the Govt. that the funds could not be legally taken. Further both the then NHT Chairman and Dr. Horace Chang have said the NHT was not raided.
Go read my link above regarding 600 million of “unclaimed funds”. Me not asking about the 500 million that they wanted for the drought program. Indeed it was a raid.
Either party would have gone to the NHT. The Port just got a bail-out to help it pay its loans, the huge tax increases by both parties have yielded less tax. There was nothing to sell in such a short time for such a large price. The tax & pension reforms were taking too long (both parties thought they could get it done, neither wanted to).
It could not have been a loan as GOJ would still have the principal on its books. As much as I am concerned about our continued denial and insulation from reality, I do not think NHT should be given so much land. My understanding is that they tried the land sale option, the crown (Her Majesty) does not have that much land for houses. Giving NHT land that should be used for production is placing a development asset in the hands of a trust. I prefer to give it away.
Finally, the NHT must not exist forever, the market should remove it someday.
Countries such a the USA and Jamaica when faced with the ugly guilt of slavery went for “quantity” at the cost of “quality” in its education systems. It has not worked. In both countries, the best schools are those that had and maintain the quality focus. We lowered the entry requirements for teachers (for volume) and are progressively creating worse students. Its a feedback system.
It may seem cruel to remove a social incentive once it has been given, but time has proven that if the poor don’t improve financially and sufficiently to repay the initial investments, everything done is not only moot but hurts the same poor you tried to help. Education cost in Jamaica grew too fast when compared with GDP. NHT was created to accelerate housing development, luckily it cannot outgrow GDP and it (NHT) also has negative effects on the competitiveness of housing market. We are now watering down the quality of health care for larger numbers (quantity). The feedback is starting to take effect, less people are going to the hospital due to poor service.
Our 50 years of slow growth is linked to failed models that our leaders have engrained in their heads. Like most politicians, they have not proof that their models can stand the test of time (when the feedback chips in). They only evaluate short-term. The data shows that the ROI for our 50 years of debt investment/spending is ~2%. Not far from our average growth.