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| Date post: | 20-Feb-2016 |
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amaican Prime Minister Bruce Golding, in his address to the nation regarding the recent re-vision of a proposed tax package, stated that revenue to be gained from the imposition of new taxes was necessary for the impending International Monetary Fund (IMF) agreement to be approved. This allocation of revenue to qualify for a loan might seem akin to pad-ding one’s account before applying for a
visa to a foreign country but it is a necessary action to be approved for help from the IMF. With the length of time that it has taken the government to finalize a deal with the Fund, it might be prudent to examine what is required of a country to be in good stead.
Conditionality is a concept usually used by the IMF that describes the attachment of certain conditions and requirements to financial aid, loan or debt relief. Conditionalities are controversial and have been somewhat demonized in the popular media most notably through the film “Life and Debt” which is a look at the consequences of IMF condi-tionality on Post Independent Jamaica. The rationale be-hind conditionality lies in the fact that the fund provides liquidity to countries who have found themselves in what is perceived to be a temporary deficit. Thus it then follows that is liquidity is disbursed without conditions then there is a risk that irresponsible governance could result in said liquidity being used up recklessly and turning that tempo-rary deficit into a permanent one. In early December, the IMF announced that it would withhold a USD$3.5 billion
loan installment to Ukraine because of its frustration with a political battle that has ignited some reckless spending in a country facing its worst economic crisis in years.
For the Golding Adminstration to table a tax package as unpopular as the one tabled earlier this month suggests that drastic measures are being asked of the Jamaican government. With an ever increasing deficit caused by fallouts from the bauxite and tourism sectors, the IMF would require proof that the Jamaican Government has the ability to implement policies that will lead to the even-tual repayment of the loan. The IMF Fact Sheet states that “Prior Actions” are one of the tools used to assess the con-ditionality that will be imposed on the borrowing country. The website states that “Prior actions could include….a formal approval of a government budget consistent with the program’s fiscal framework”. When the agreement between the government and the IMF is finally reached we will be able to view the conditionality that we will be imposed upon us and we can only hope that the present tax package will have served its purpose.
J
BUSINESS LOUNGEReason and Rationale: the con-nection between the tax pack-age and the iMF By: Andre’ Burnett
the hon. bruce golding, prime Minister of Jamaica
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the philosophy oF taxation
aniel Defoe’s take on death and taxes has become been a clichéd narrative on the cer-tainty of the two things listed prior, but the association of tax with death suggests an force of nature that is as unwelcome as it is inexorable. If one were to hear of the con-cept and purpose of taxation without being previously influenced by popular views they might find the negative reaction to taxation somewhat mystifying and they could not be
faulted for this.
Taxes are supposed to be the end product of a social contract between a government and its people where inhabitants of a country should sacrifice some of their income so that the government can do its part to pro-vide for them. So why do people automatically feel aggrieved at the announcement of new or increased taxes? It could be because people are inherently selfish and would much rather fend for themselves rather than subscribe to “socialist” trappings or it could be because people feel that they do not recoup the benefits from their country that is proportional to their contribution.
It would be easy to think that increased taxation would be directly proportional to unhappiness then, apparent-ly Northern Europeans would like to stick a pin into that thought balloon right now. Denmark, Finland and the Netherlands were top of the Organization for Economic Cooperation and Development’s happiness ranking even though Danes contribute nearly two thirds of their yearly income to tax coffers. What is the difference be-tween these countries and the rest of the world? It could be the expansive social programs that their governments institute which include health, old age and unemploy-ment. Bang for your buck? That would be a yes, sir.
Judging from the number of peasant revolts in Medieval Britain, people of ancient times didn’t particularly care for taxes either, then again being taxed for having a beard or a chimney would make even a monk see red. History has shown that people’s negative attitude to-wards taxation is nothing vogue and it can all be attrib-uted to the feeling that the poor were not being given a fair shake. The concept of taxing citizens to pay for wars are as old as wars themselves and only the ancient Greeks show any record of having successfully refund-
ing citizens for profitable war efforts.
Reward for sacrifice is never a bad thing and even the most self-ish among us would be loathe to disagree.In Jamaica, there are few announcements that cause more pub-lic outcry than the an-nouncement of new or increased taxes as the present government has found out twice in its current term. The way Jamai-cans view taxes will hardly be changed over night but it should be the onus of this and future governments to yearn to emphasize the profitability of taxation.
yoUR Money insights
Your Money Reporter: Andre Burnett
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don’t let that green guy steal your christmas!
uring the holiday season, it can be difficult to manage a business, a family, and the annual stresses of the holidays. Throw in a recession, and you have a recipe for a grouchy Christ-mas. It is important to take a deep breath, relax, and enjoy this time with friends and family. Below are a few tips on handing this time of the year:
1. control what you can controlThere is no sense worrying about things you may not have any control of. You can’t predict what will be the perfect gift for Aunt June, and you certainly can’t predict the direction of the economy. However, you can make in-formed decisions based on the information you do have. Have confidence in your own decision-making abilities, and execute it based on your best judgment. Both Aunt June and your business will benefit from your conviction.
2. budget wiselyRemember you have financial limits, both at home and at the office. Prepare a budget for your holiday spending much as you would for your business. It is not stressful to spend, but it will be stressful to pay when bills and state-ments arrive in January. Take a practical approach, and give yourself one less thing to worry about in 2010.
3. Remember, you are not aloneYou are not the only one experiencing stress this time of year. Your relatives, employees, and colleagues are all going through the same stresses, leading to potential hol-iday squabbles and blow-ups. Take some time to listen to them vent and complain, offer advice and express your own challenges. Ninety percent of the time, an angry or stressed person just wants to be heard, and lending that ear will prevent a Christmas Grinch, and will make you feel better in the process.
Remember, the holidays should be a time for enjoying your family, friends, and something bigger then you and your business. Sit back relax and enjoy the fruits of your labor from 2009.
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