Susan Smith, Staff Reporter
Bruce Golding
PUTTING IN policies which govern the management of exchange rates, interest rates and other economic indicators is key to the overall success of the CARICOM Single Market and Economy (CSME), advised Senator Bruce Golding.
He was addressing members of the Jamaica Employers' Federation at their CEO breakfast held on Wednesday, at the Knutsford Court Hotel.
The Senator said while the revised Treaty of Chaguaramas contains issues relating to policy management, it has simply skirt the surface in documenting the harmonisation and management of economic policies, the most fundamental being the absence of a policy to deal with countries which do not comply with the rulings of the CSME.
"The Treaty of Chaguaramas contains undertakings given by the signatories that require harmonisation of the critical policies that are at the centre of domestic policy management. They involve issues such as the harmonisation of investment incentives, the harmonisation of exchange rate policies, interest rate policies, taxation policies," he outlined.
"We have not yet addressed issues of policy management in Jamaica. The Cabinet has not yet dealt with this," he said.
"One of the weaknesses of the revised Treaty of Chaguaramas is that it has no sanctions. It provides no sanction against countries that fail to conform to the undertakings," he added.
COMPLIANCE AND NON-COMPLIANCE
Mr. Golding argued that the European Union (EU) has clear terms of compliance and non-compliance. It is said that two member countries cannot incur a fiscal deficit that exceeds three per cent. If a country incurs a deficit in excess of three per cent, it is liable to be sanctioned or immediately fined 1 per cent of the year's GDP, explained Mr. Golding.
Furthermore, he pointed out that the EU council of ministers assume right and responsibility to prescribe a framework for corrective action that a country is required to take. According to the Senator, there is no such provision in the revised Treaty of Chaguaramas. A country in the EU, however, can be expelled from the union if it fails to comply.
And on the issue of harmonising policies, Mr. Golding is in consensus with a report generated from the International Monetary Fund, which stated that, for the region to succeed in the CSME, there needs to be a single tax policy throughout it.
He argued that the concept has powerful justification but is not possible or sustainable without the documentation promoting the policy.
He explained that there is nothing in the discussions so far to indicate which model would be used if the CSME were to adopt a tax regime. "How is the harmony of income tax going to be achieved?" he asked.
"We in Jamaica have a tax system where the income tax is now 25 per cent. Other countries like Trinidad have a graduating tax system. Antigua charges no income tax," continued Mr. Golding.
In this event, the matter up for consideration is whether or not the CSME would impose a tax regime on the Antiguan government or bring other countries to the Antiguan level of paying no income tax.
