Of course, there is much to engage in rabble-rousing over in these difficult economic times, not least being the administration's doubling of the ad valorem tax on petrol, an action that, in the past, has proved a flashpoint for violent street protests. The Opposition, however, has been, so far, a model of restraint, declining to incite its supporters to street action.
Moreover, Dr Davies acquitted himself well with a critique of the Budget that was mature and thoughtful, offering additional and/or alternative financing options to help jump-start the stuttering economy in the face of a global economic crisis.
Not unsympathetic
As the finance minister who, a decade ago, attempted to raise the tax on petrol, it was unlikely that Dr Davies would oppose the present Government's gasolene tax, through which his successor, Audley Shaw, hopes to garner over $13 billion. Dr Davies, however, appears not to be unsympathetic to critics who argue that the additional tax might have been pitched too steeply; that it is regressive; and that it is likely to be inflationary.
In that regard, Dr Davies' alternative is to add a surcharge of between five and eight-and-one-third percentage points on the 25 per cent withholding tax on interests. That, he estimated, would earn an additional $6 billion to $8 billion, which would allow the Government to reduce the gasolene tax and provide cash to meet other spending obligations.
On the face of it, such a move would not be a good idea, possibly leading to capital flight. Except, as Dr Davies noted, Jamaica faces a crisis. Moreover, with interest rates, in some cases, at nearly 25 per cent, investors are receiving real returns of up to 17 per cent. In some markets, when bank charges are taken into account, real returns are almost negative, diminishing the probability of a flight to quality.
Worthy of serious examination
This proposal, especially when taken in the context of growing calls - even among leaders of the private sector - for a broad sharing of the economic burdens, is worthy of serious examination.
We find interesting, too, the shadow minister's idea to steer up to $3 billion from the Universal Access and the Tourism Enhancement Fund (TEF) - which between them have around $9 billion - to upgrade squatter settlements in the main tourism resort towns of Ocho Rios and Montego Bay. This, we feel, would not be outside the remit of the TEF, the tax paid on visitors to be used to upgrade the tourism product. Indeed, nothing, potentially, impacts Jamaica's tourism so negatively as the country's deep problem of crime, fed, not inconsequentially, by the decayed environment in which too many people live.
Dr Davies has set a high bar, which Prime Minister Golding and Mr Shaw will now have to meet, and perhaps surpass, when they respond. It all augurs well for Jamaica.
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