OPPOSITION SPOKESMAN on Finance Dr Omar Davies is proposing that the Govern-ment spend more on capital projects this fiscal year, with a view to generating income for many Jamaicans and to "return hope to many faces".

Davies, in his contribution to the 2009-2010 Budget Debate in the House of Representatives yesterday, presented what he called an economic recovery programme for national growth.

While trashing aspects of the Government's $555.7-billion Budget, Davies proposed at least an additional $6 billion in expenditure.

Spending important

He said the proposed spending was particularly important because of the increasingly grim financial international conditions, the implications of which could be devastating to Jamaica's economy if not given critical attention.

"The prospects for the world economy for 2009 and 2010 remain bleak," he said.

Davies, who served as finance minister in the previous administration, added: "At the most basic level, it means that these countries (the United States and United Kingdom) will be focusing on their domestic problems and concern about the fate of a country such as Jamaica is not high on the agenda."

To combat the effect of the loss of income arising from the economic downturn, Davies has proposed that the National Housing Trust (NHT) undertake an expanded housing construction programme in all parishes.

"This would simultaneously create additional employment and provide hope for a growing number of middle- to lower-income persons who feel that their chance of owning their own home is all but gone."

According to Davies, the programme would require no budgetary support. He has suggested that the NHT partner with private financial institutions to deliver the housing units and said that in order for it to be facilitated, the tax-free status of the trust must be restored for a specified time period.

Davies also called for a "reinvigoration of the (Operation) PRIDE programme".

One-third are squatters

He made the call in the context of Water and Housing Minister Horace Chang's revelation in Parliament that a third of Jamaicans are squatters.

The opposition spokesman said that in returning to Operation PRIDE, there should be a curtailment of any addition to the number of informal settlers.

However, not only did Davies propose spending in the area of housing, but he has suggested that more attention be placed on agriculture, infrastructural development and the bauxite/alumina sector.

In the area of agriculture, Davies said "while it is desirable and recommended that additional support be given to the small-farming sector, expanded production in agriculture must come on two fronts".

He argued that greater emphasis must be placed on capital intensive agriculture, such as agro-processing.

Infrastructure programme

Meanwhile, the former finance minister also proposed an urgent programme of infrastructural works to include drainage, river training, reforestation and the building of retaining walls.

In order to fund his proposals, Davies has suggested raiding the Universal Access Fund (UAF) and the Tourism Enhancement Fund (TEF). He has also proposed that the tax on interest on government bonds be increased.

In justifying the raid of the TEF and UAF, which have a combined $9 billion and have been set up with additional objectives, Davies said it was a "time of crisis" and said the two funds should be called upon to provide a total of approximately $3 billion to assist in financing the programmes.

Greater share of taxes

With regard to the tax on dividends, Davies said the persons who would benefit from the need for the Government to borrow money through bonds must pay a greater share in taxes.

"The proposal is that the tax be increased from the current 25 per cent to either 30 per cent or 33 1/3 per cent for fiscal year 2009-2010 in the first instance. In any event, this would still yield a net of between 16 per cent and 17 per cent on holders of government paper," Davies said.

He added that the tax move could yield between $6 billion and $8 billion and could facilitate a rollback on the $8.75 special consumption tax on petrol.

daraine.luton@gleanerjm.com

Budget Debate 2009-10 continues