Persaud Wilberne Persaud, Financial Gleaner Columnist
Budget time came and is about to go. Customary discourse on proportions to social services, capital, election spending, etc., is now dutifully completed.
Yet for me, two stories on the same day - Gleaner, April 13 - disclose an issue of much greater consequence than all our pundits' views on budget numbers and their likely impacts.
One headline reveals: 'Government of Jamaica owes NHT $8b - contribution arrears climb $2b in a year'.
The other says: "Finance and Planning Minister warning of a 'bleak social security future' for tourism workers, and wants to have dialogue with unions and management in the industry regarding how to increase their statutory deductions, and hence, the benefits for which they would be eligible."
The stories report the idea of taxing gratuities of tourism workers and efforts to rectify non-payment of National Housing Trust statutory deductions and employer contribution for employees of the state. Can our government, with impunity, break the law with which all others must comply? If so, why? What implications follow?
These two issues have major significance for policy, equity and integrity of government finances. Non-payment of statutory deductions is a serious breach and should be tolerated from no entity - including the Government.
Whether the National Housing Trust can, as its boss says, manage to deal with its obligations to contributors and others is an absolute non-issue.
Hole in asset mix
Government's non-payment leaves a hole in the NHT asset mix that should not be there. Land, bonds, an IOU scribbled by hand on the cheapest of paper - whatever is chosen, this problem should be fixed. Its continuance is akin to allowing your young child to come to the table with unwashed hands - contamination and disease at some stage would not be far off.
NHT must maintain peoples' confidence. More importantly, its institutional role to create and grow the cohort of Jamaicans with a fundamental stake in our nation's future should be enhanced. The problem must be addressed. And finally it cannot be right or equitable that every business, small and struggling, big and prosperous must pay over statutory deductions coupled with their contribution on pain of penalty interest rates, or other hardships, while government gets a free pass. This brings me to the idea of taxing gratuities of tourism sector workers.
The way the discussion is framed highlights the long term interest of the workers themselves. If workers do not save and invest a portion of their current income then in old age they will be destitute, burdens on their younger relatives or in the final analysis, wards of the state.
This may indeed be true. But its truth as an outcome requires that tourism workers do not themselves save or invest part of their income for instance, in property ?— their own homes ?— or their education, or life insurance and the like.
In other words the state in this framework is paternal.
But what if deductions and contributions to the state for investment in delivery of a social welfare net are not prudently managed? The fact of government's withholding of contributions to NHT cannot square well with its wish to bring tourism sector gratuities into the benefits calculation.
What if workers begin to lose confidence in their government's commitment to equity in benefits distribution over time?
Union response is predictable if not well reasoned. They take a short rather than long term view of the problem. In the long term interest of tourism workers, part of their total current income should be set aside for retirement.
The issue is how to achieve this. The sector argues it cannot raise wages. Workers argue they cannot lose current consumable income. In part workers' reasoning includes two questions: how realistic is it for retirees to rely on the National Insurance cheque for day to day sustenance in the distant future? Second how soon can they expect to access NHT benefits for owning a home?
The population at large does not understand annuities, repurchase agreements or sinking funds. They need not.
We have sufficient experts in these fields of asset management to go around. But there appears to be at large a feeling that the playing field is not level, that somehow costs and benefits ?— pain and gain ?— are not equitably shared. This cannot be a good thing. Government therefore must do all in its power to change this perception. And bythis we propose no public relations blitz.
The perception is based upon life's realities. We propose changing life's realities. Living up to commitments freely, willingly undertaken is a surefire way to achieve this.
wilbe65@yahoo.com
