The matter of a nation's Budget is one of great importance and should be subject to the highest degree of scrutiny by all stakeholders. Unfortunately, most of the criticism heading the Government's way can hardly be regarded as constructive. Rather, it is short-sighted and largely based on emotion.
The notion that placing the standard-rate consumption tax on books and computers will lead to higher levels of illiteracy and a more backward society is a dollar short of ridiculous. If we were to proceed according to this same logic, we should eliminate tax on toothpaste and underwear or else we could end up with a rotten-toothed and naked society! Let us not forget that one of the highest taxed industries (telecommunications) is also one of the fastest-growing industries in Jamaica. If you want an explanation for this, I will gladly teach anyone who is interested a brief economics lesson on the non-price determinants of demand and the relative price (in)elasticity of demand.
Reshuffle your priorities
The fact is that people buy what they want because they need it or get satisfaction from it, not because it is tax-free. In other words, a parent who does not place value on reading to their child will not go out and buy books because it is tax exempt. This is not to say that the added cost of general consumption tax (GCT) on items won't affect demand. It certainly will; people will simply have to reshuffle their priorities, search for better value for money, and/or buy less.
As for computers, these are relatively large purchases that a person or family makes every few years. It is not an item you would find in one's weekly grocery basket. Tax-compliant businesses will claim back this GCT anyway, and schools will have the tax waived. The people most affected by placing GCT on computers are persons like me who want to upgrade the machine I already have to something newer, prettier and faster, and for that I will gladly pay my 16.5 per cent because I know that it will go to pay for the larger allocation that the PATH programme received this year.
Look at the bigger picture
Some of the fastest-developing countries in the world like India and China have consumption taxes on printed matter and computers. I think it is time that we, as a people, stop giving into the temptation of sensationalism and take a look at the bigger picture. Let us remember what is going on in the world economy: the first truly global financial crisis, the worst recession since the Great Depression. With our public finances as fragile as they are, we have still managed to stay afloat. Would anyone be willing to trade that stability for a discount on rolled oats? I think not.
I am, etc.
NICOLE LYN
lyn.nikki@gmail.com
Kingston, Jamaica