The 2008 Global Recession
In 2008 The International Monetary Fund stated that the drying up of global credit after the collapse of Lehman Brothers and the ensuing Global recession would lead to serious concerns for Jamaica’s economic prospect and the sustainability of the country’s 1.5 trillion debt would put pressure on the country’s economy and exchange rates.
However the then Minister of Finance the Honorable Audley Shaw dismissed the IMF concerns and declared that the Global financial crisis would not have any impact on the Jamaican economy. In fact the Minister of Finance the Honorable Audley Shaw stated that the Global recession would be opportunistic for Jamaica as he declared that, as a result the Jamaican economy will grow +2.0% to +3.0% in the next fiscal year as he moved to downplay concerns of the effects of a global economic slowdown, and in particular, the looming recession in the United States on the Jamaican Economy. According to Audley "Man-A-Yard" Shaw, the recession, if it were to occur, could present a number of opportunities for Jamaica.
The Minister of Finance the Honorable Audley Shaw also declared that oil price is going to go down if we have a recession. In fact the opposite happened oil prices shot up to record highs and in fact none of Shaw’s other grand predictions happened, Shaw also said “the Government was committed to fiscal discipline "that was going to cause Moody's and Bear Stearns and Standard and Poor's and everybody else" to upgrade rather than downgrade the country's credit rating.” …, nothing went according to Shaw’s Grand plan and vision, it went the way the IMF said it would and the was downgraded by all.
The Jamaican economy buckled under the recession that Shaw said would not affect us and shrink with GDP contraction of -0.915% in 2008, -3.046% in 2009, -1.217% in 2010, only to achieve marginal and mediocre growth of +1.5 in 2011. Then Minister of Finance the Honorable Audley Shaw had the balls of steel to turn around and blame the recession he said was not going to affect us....
Jamaica’s dependency on international events is well defined. The international markets is where we do most of our business, it is where we borrow money to finance every aspect of the Jamaican society. The International Markets is where we hope to sell our products and where we hope to attract our tourist and earn Foreign Exchange. So how then did the Honorable Minister of Finance not see what everyone else sees? How did he not see how the Global Recession would affect us? The Minister of Finance the Honorable Audley Shaw failed to put in place measures and policies that would help to cushion the effects of the Global Recession simply because the Honorable Minister did not see how this recession would affect Jamaica and by the time reality of the recession catches up with Audley "Man-A-Yard" Shaw it was too little too late, the Jamaican economy was already in free fall, in the middle of it like being in the middle of Hurricane Gilbert.
The Christiana Bypass To Heaven:
In 2011 The Minister of Finance the Honorable Audley Shaw was once again called to explain the high cost of the Christiana Bypass, called by many the Bypass to heaven. The Christiana Bypass is two lanes of a one kilometer road way costing a whopping $800 Million. This price we are told, did not include the cost of land already purchased or to be purchased to complete this expensive project. Jamaica has built several other roads with multiple bridges and through virgin territory for much less than $800 million-plus per kilometer so why was this small roadway so expensive? The 33-kilometre stretch of road from Mandela Highway to Sandy Bay in Clarendon cost, on average, $390 million per kilometre. To date we have not gotten any decent explanation form Mr. Shaw apart from the virgin territory explanation which is rubbish.
Audley "Man-A-Yard" Shaw Believes in the Low Exchange Rate Policy:
In 2010 Audley "Man-A-Yard" Shaw signed a new IMF agreement for a sum of US$1.27 Billion and then proceeded to pump it into the foreign exchange market while failing every IMF test and breaking the Agreement he negotiated, read and signed. He also failed to grow the economy and earn more foreign exchange, the assumption is that low exchange rate would lead to economic growth.
BUT the opposite is true, low Foreign Exchange Rate in Jamaica leads to an increase in over the top importation of everything, even things we already produce.
- Jamaica Import $2 Billion worth of Brazilian Weave per year
- JAMAICA'S FOOD import bill continues to spiral out of control, jumping by US$100 million in 2011 to a staggering US$930 million and in 2012 was US $1,000,000,000 (Billion).
- Jamaica, land of wood and water, Imports $3 billion worth of lumber annually. The farm owner Dalkeith Hanna said,when he first started planting the trees, the cost was 90 cents per square foot for lumber, but in less than two decades the cost is now more than $90. He noted, however, that he still has been able to sell his locally grown lumber at a cheaper cost than the imported wood.
- 93% of Onions consumed in Jamaica were imported in 2009.
- Jamaica imported US$8.4-million worth of banana chips, up from US $3.7 million in 2010, so it seems Chippies and St. Mary Banana Chips is not good enough anymore.
- Jamaica imported 70% of ginger we consume in 2010.
- Jamaica Imported Pepper mash from the Dominican Republic although we produce the best scotch bonnet pepper, the finest-tasting in the world.
- Jamaica importing in excess of J$8 billion worth of tomato paste each year.
- Jamaica’s import bill for Irish potatoes decreased from US$4 million in 2008 to US$2.6 million in 2010.
- However Jamaica imported US$15.1 million potatoes chips, wedges, and fries in 2010.
- Jamaica supply only 15 per cent of Goat meat on the local market.
- Jamaica imported 1.3 million kilogrammes of goat meat, valued at US$5.2 million, in 2010, the country needs approximately three million goats to attain self-sufficiency.
- Jamaica Imports Concentrates costing J$1 billion.
- Jamaica imports orange concentrate from the United Kingdom of Great Britain, a country that does not grow oranges.
I am all for Revaluation if the Jamaican dollar revalues because we earned more foreign exchange but not Shaw. Mr. Shaw’s policies led to the doubling of the National Debt, increasing Jamaica’s debt to GDP ratio to 145% of GDP but like I said the Jamaican people do not care how you reduce the Exchange Rates.
Year: 2007, Import: US$6.8B, Export: US$2.3B, BoT: US$-4.5B
Year: 2008, Import: US$8.1B, Export: US$2.4B, BoT: US$-5.7B
Year: 2009, Import: US$5.0B, Export: US$1.3B, BoT: US$-3.7B
Year: 2010, Import: US$5.2B, Export: US$1.3B, BoT: US$-3.9B
Year: 2011, Import: US$6.6B, Export: US$1.6B, BoT: US$-5.0B
Question: How do you think the Jamaican Government Finance the Negative Balance of Trade (BoT)?
Answer: We Borrow Money at high interest rate
On April 20th 2016, US$36,566,567.7200 pumped into the foreign exchange market and the dollar devalued to J$122.55. However after the General election the JLP Government started pumping up to US$54,952,951.3600 PER DAY into the market but that is NOT sustainable especially when we do not earn US$1 Million Per Day. So where does all this US$ money come from? We borrow it, to finance stupid, idiotic consumer goods import. If the Jamaican people want to sustain a US$54,952,951.3600 PER DAY import habit like a crack whore then the Jamaican people had better start selling something like a crack whore. Something locally made that the world wants and maybe we will earn enough US$ to feed our filthy import habit!!!
I see ATL Automotive will be selling Top Of the Line Porsche now.... ATL Automotive currently offers Audi, Volkswagen, Honda brands, BMW, and MINI. Our government has given us the best highways and byways that Jamaica has ever seen; now we’re providing the best cars to use on them! Stewart's Auto sells Land Rovers, Jaguars.
Audley Shaw Apologies
Every time Audley Shaw opens his mouth and makes some accusation he ends up apologizing or sued in court because he knows it is not important that you tell the truth. If he tells a lie 50% of the people will believe him and he would have achieved his objectives. Lie for Effect!!!
In 2015 Audley Shaw declared that he saw an unreleased Health Ministry Audit Report stating that there was an infectious outbreak in the neonatal unit of the Cornwall Regional Hospital. On the day the audit team arrived at Cornwall Regional Hospital there was an infection outbreak in the neonatal unit," said Shaw last week, indicating that he was reading from the leaked audit report which was presented the Health Minister in August. But the audit, released on Friday, does not support Shaw’s claim.
In 2012 OPPOSITION Spokesman on Finance Audley Shaw yesterday apologised to Security Minister Peter Bunting for statements he made at two public meetings last November. The public apology forms part of an out-of-court settlement reached on Tuesday as a result of a libel suit Bunting filed against Shaw. The other aspect of the settlement is that Shaw compensates Bunting for damages as a result of the statements which have been described as false and libelous, which includes the payment of $2-million which Bunting had to take him to court again in order to try and get it.
$1.5 Million Tax Relief Package:
During 2016 Election campaigning the JLP came up with a sure why of winning a General Elections and that is to promise the Jamaican people money, any party that promise The Jamaican people money will always get the votes from the people. The JLP tried telling the truth in 2011 and it got them nowhere, you cannot tell Jamaican people that there is bitter medicine ahead and expect them to vote for you, that will not work. The only person I have experienced who can sell hardship and still win elections is Michael Manley. That is because Michael Manley does not only sell hardship for hardship sake but hardship as a mountain to climb, the struggle and the light at the end of the tunnel. He sells the great accomplishments and wonders that awaits after all this sacrifice. Michael Manley sell hope and change and Nation Building and Egalitarianism while selling hardship.
The JLP jumped up and down on the campaign trail and promised the Jamaican people tax relief, then promised to double the National Minimum wages, then they promised that Healthcare and Education will remain free of top up fees. This was the carrot on the stick that was too good for the Jamaican people to pass up. The tax relief would come in the form of an increased tax threshold where anyone making $1.5 Million or less will be exempt from paying income taxes as the Government claimed that GCT was a better performing tax and they would make more money from that tax if the Jamaican people had more money to spend.
The question was raised as to how the short fall in the budget was going to be filled and the then opposition made reference to the Gas tax that was used for the oil hedge fund. The JLP declared that they will use the funds from the $7 gas tax that was put on the backs of the Jamaica people by the PNP government in March 2015. In his submission to Parliament, the then Minister of Finance estimated that this new tax would provide $6.4 billion in revenues and outlined what was actually collected and what was actually spent and how it would be spent, securing oil for the Jamaican economy.
The Minister of Finance the Honorable Audley Shaw stated that the new JLP’s tax threshold proposal would benefit 120,000 workers who would no longer pay income tax. The opposition claims that the new tax relief plan would cost the Budget $32 Billion as they calculated the number of affected people at double that of the JLP numbers. However the JLP said the cost to the Budget would be between $12.5 billion and $13 billion. One must assume that the PNP was overstating their numbers for effect and the JLP was understating their number also for effect so I put the actual number somewhere in between.
In any case we can crunch the numbers till we are blue in the face, all the Jamaican people heard was that come April 1st 2016 their take home pay would increase by some $18,000 per month. They also heard something about doubling the minimum wage and not having to pay any fees on Education and Healthcare. That was all they needed to put their X beside the Bell.
|Jamaican People Reaction to Tax Break: Money, Money, Money|
And it came to past that the JLP won the General Election of 2016 and became the Government of Jamaica with report of various helpers and employees soon after going to war with employers over their new found wealth that they were promised, but there was none be had. The new Prime Minister The Honorable Andrew Holness promised that the JLP would live up to their promises and deliver on all their promises but still the deadline day for delivery of these promises came and went and still no implementation, until The Minister of Finance the Honorable Audley Shaw stepped in to offer his explanation.
FINANCE Minister Audley Shaw accused the People’s National Party (PNP) of concealing the truth about the depletion of funds from the gas tax, which the Jamaica Labour Party was banking on to implement the proposed $1.5-million tax break. The Honorable Audley Shaw said that the money was set aside to finance the JLP tax plan. He said that the PNP Government used up funds earmarked to finance his $1.5 million tax relief programme. "We have found that the oil hedge fund was not set aside, that it is actually already accounted for in the Consolidated Fund," added Shaw..
An Article in the Gleaner announced that The Honorable Audley Shaw knew the state of the funds in question from as far back as September 29, 2015 because Parliamentary Records Shows that the then Shadow Finance Minister was told about use of Oil Money. “Hansard, the official verbatim records of Parliament, shows that during a sitting of the Lower House last September, Shaw the then opposition spokesman on finance was given a full account of what was being done with the money by then Finance Minister Dr. Peter Phillips.” So the Honorable Audley Shaw stood up before the country and did what he does best... He lies!
Let’s put aside the fact for the second that Audley Shaw is a known liar and ask the question how does a party that is in opposition and not in charge of the National Budget set aside and earmark money for an opposition plan put together by a party that was not in power and as such not the government?
Tourism Enhancement Fund
Now we have the new Government looking high and low like an hungry man scraping burn rice from the bottom of a pot trying to find money to finance their master plan which is the reason they were elected and it seems their new target is the Tourism Enhancement Fund. We were told to be scared that Cuba was now going to be open and that tourist travel to Jamaica would suffer as a result and as such the Ministry of Tourism was going to launch an all-out offensive in order to protect and safe guard Jamaica’s tourism industry from the Cubans. Now In order to launch this offensive the Tourism Enhancement fund would be the weapon of choice but if the Government uses this fund to finance their $1.5 Million tax break then what of tourism? How will we mount the charge?
The Paradox of Diehardism and Principle
If you support THIS extraction of money from the Tourism Enhancement Fund to be used for purposes other than the designated usage then surely you must have supported the last Government extracting NHT funds for budgetary support? If your motives are based on principles then surely you must have supported the last Government extracting money form NHT for budgetary support.
If you are against extracting money from the Tourism Enhancement Fund for purposes other than the designated usage as a matter of principle which have nothing to with politics then surely you must be outrage that this Government is planning on extract money from the Tourism Enhancement Fund to use for a purpose it was NOT intended for. SO where is CAPI, the Articulate Minority and all the other JLP operatives NGO who protested the last Government use of NHT funds. Where is wearing of black as a sign of protest and where is the court case taking the Government to the supreme court?
Surely you cannot be outrage only when your party is not in power but turn a blind eye when they are in power, where are your principles? Personally I do not care either way so long as the funds are not withdrawn to bail out friend and company as in the case of Outameni which I opposed on Principle and declare a corrupt move.
Free Money Give Away, Free Healthcare and Education for All
There was a time when I would have supported free public Social Services for all but that time as long gone because now I understand the real Value, Principle and the Practicality that one should only spend what one can afford to spend based on ones earnings. I understand the concept of living within ones means. The last time the JLP Government embarked on this grand social experiment they doubled the National Debt because the Jamaican Economy does not generate enough Tax Revenues to cover our Public Expenditures. The Jamaican Economy cannot afford the Education System we have. The Jamaican Economy cannot afford the Healthcare system we have and the Jamaican Economy cannot afford the public sectors we currently have. The Jamaican Government in order to finance our Public Sector must borrow large sums of money at high interest rates and now they must find money to support the Over-The-Top, Free Money, Feel Good, popular Pre-Election Promises they made. BUT I am going to give my Government the benefit of the doubt because maybe they know something this simple person struggling balance the personal budget is not aware of, maybe they have a money tree.
I would love for Public Education in Jamaica to be free at all levels. I would love it if healthcare was free for all, at all levels and I would love it if Jamaica was a country that could provide top of the line Public Services on the same level of the Scandinavian countries. The Scandinavian countries provide proper public social services to the vast majority of their citizens but they also collect Proper Taxes to finances these services. Denmark for example has a 60.4% income tax rate, Sweden 56.4% Norway 39%. Jamaica However has low tax compliance and even when entities collect taxes from the people, they are NOT turning over those taxes to the Government. 63,000 registered companies in Jamaica only approximately 3,500 are regularly paying taxes and many more companies operate Underground, Unregistered and Under the Taxman’s Radar.
If the Government is determine to embark on this tax break, double minimum wages, free education and free healthcare THEN the Government needs more taxes and should Tax Religious Institutions, Tax Nightly Merriment and Increase Taxes on Imported Consumer goods by 200%, lower the taxes on locally produce goods and become draconian when collecting taxes in order to increase tax compliance while removing all waste from the Public sector and REDUCE the Public sector work force by 30%. THEN MAYBE we could afford all these feel good, merriment loving, free money give away promises because at the rate the Government is going I would not be shocked if the Government load the contents of the Bank of Jamaica into a helicopter and deposit it from the air, onto the population like a rainy day in hurricane season.
I would rather the Government make fools of fools than try to do foolish things. Promising fools, fools gold to get elected seems to be the only way to get elected in Jamaica. I am all for the old Bait and Switch routine for votes because I fear if the Government tries to implement their plans it will be an Economic disasters because we simply cannot afford it.
How I see It
- The Tax Break will result in reduce Government Revenue, there will be a shortfall in the Budget and I expect the Government will be forced to borrow money to maintain the same level of expenditure.
- The Tax Break will increase spending but I anticipate that 90% of that increased spending will go towards spending on imported items. I do not see the increase in disposable Income going towards supporting local production and employment that is not how the Jamaican people roll, nightly merriment will also benefit.
- You cannot appeal to the better nature of the Jamaican people to buy local because when it comes to spending they have no better nature. If you want to control the spending habits of Jamaicans then you must do so through legislation, make the things they want expensive and the things they need cheaper, make imports unattractive by making imports expensive and remove ALL tax waivers on imported consumer goods. The hard working tax payers should not be subsidizing Consumer Goods Imports.