AT A sitting of a special parliamentary committee to preview the 2005/2006 national budget, Dr. Omar Davies, Minister of Finance, danced around a number of taxation issues raised by recommendations of the Matalon Tax Committee and some penetrating questions poised by Audley Shaw, Opposition spokesman on finance.
But an overview of the Minister's response indicates that although the Matalon recommendations will likely set the agenda for the forthcoming budget, it will be dissected to eliminate those sections which are politically unpalatable to the administration.
Already there are signals that the General Consumption Tax (GCT) will not be increased because, according to Dr. Davies, such an increase would affect the poor more than the rich, the logic of which is not universally accepted. Shifting a tax regime from income to consumption is championed by many economists, and since the rich consume more goods and services than the poor, some would argue that an increase in GCT weighs more heavily on the wealthy in the society.
It appears that Dr. Davies is not contemplating the introduction of a capital gains tax, and he is probably right in his assessment that such a move might choke off investment in a country like Jamaica, where it is the injection of capital in new enterprises that is necessary to open up employment opportunities.
The issue that seems to be exciting Dr. Davies' most intricate dance steps is that of a tax on fuel. He obviously sees the almost irresistible logic of this but, as a politician seeking even higher office than he now enjoys, he knows the danger of public reaction to a rise in gas prices, a reaction which led to riots in 1999 and which shut down the country for three days.
What Dr. Davies has done is to run the gas tax up the flagpole once more to see if anyone salutes it. With the Air Jamaica debt hanging around his neck like an albatross, some $2.7 billion extra revenue from the gas tax would be greatly welcomed. Perhaps this time around a public education campaign might make the prospect of more expensive gas more palatable.
THE OPINIONS ON THIS PAGE, EXCEPT FOR THE ABOVE, DO NOT NECESSARILY REFLECT THE VIEWS OF THE GLEANER.
