FOR THE public to protest against higher taxes or any other government policy is a natural part of the democratic process. But to block roads and burn and loot is no part of civilised protest. It is the equivalent to suicide.

Unfortunately the government, by its policies, has been largely responsible for bringing about the current protest. For it has been the imposition of some $4 billion in extra taxes that has caused the trouble. And this imposition has in turn been brought about by huge fiscal deficits. These deficits mean that the government has to continue to borrow heavily.

Here we must come to the vital matter of interest rates. So long as interest rates remain high our economy will never be able to grow. If it does not grow the vast fiscal deficits will continue. Our earnings from bauxite have been falling, our earnings from tourism remain flat. About half the firms listed on the Stock Exchange seem to be teetering on the brink of insolvency, if they are not already insolvent. This also applies to a large number of businesses not listed on the Exchange. It is well recognised that our business woes are due to high interest rates.

Our interest rates are largely determined by the rate of interest paid on government paper. More than half of the government borrowings have been from the Jamaican people. This has involved interest of anything from 22 to 24 per cent. The interest on our foreign borrowings is at least in the region of 12 per cent. So as this continues there can be no hope of reduction in local interest rates.

Interest rates

It seems that the critical level of interest rates on government paper is, probably, around 20 to 22 per cent. Below this people begin to buy US dollars heavily which creates a flight of capital. Had the government accessed its borrowings through the I.M.F. interest rates would have been very much less which, in turn, would have allowed local interest rates to fall. But the expedient has not been available to us because of the stupid and obstinate refusal of the Prime Minister to call upon the I.M.F. for help. While this refusal continues our interest rates will continue to remain high, our economy will not grow and vast budgetary deficits will continue. It is not only the protesters on our streets who suffer from suicidal tendencies. Our government similarly suffers.

I see no way out of our difficulties at the moment. While the policies of our government obviously remain sterile and unpopular the J.L.P. remains ineffective and the N.D.M. may be said hardly to exist. So, I suppose, rumblings of discontent will continue punctuated by destructive protests from time to time. The government prides itself on having controlled inflation, but the hissing noise you hear is our economy deflating itself.

Departure tax

I don't suppose that a thousand JA dollars is much to an American, and I know that the departure tax must add up to a considerable amount to the government. It's a great system. We pull in the tourists by heavy advertising and heavy discounting and then, when we get them here they have to pay to escape. The departure tax seems a bit inhospitable. After all, when my readers give a party they don't stand at their door making their guests' pay on leaving. The Cayman Islands charge no departure tax. I know we need the money but could we not find a more graceful way of taxing our tourists?

A good suggestion

With the petrol tax rolled back by 50 per cent, one way of increasing revenue is obviously to make tax collection more efficient. G.C.T. is a good tax but unfortunately, it is often not charged or, if charged, a number of dishonest firms don't pay it over to the government.

An extremely able friend of mine has made the suggestion that the G.C.T. should be turned into an excise tax payable at the source of all goods rather than at their point of sale. This would avoid all fiddling and increase its take considerably.

On the subject of tourism

The recent fuss has had a damaging effect upon our main source of foreign earnings which brings to the fore our remarkable capacity for messing in our own nests. We shall have to learn how to mount less suicidal protests in future. I gather that a number of jackasses even burned canefields.