'No new taxes'

Finance Minister Dr Nigel Clarke yesterday said that despite planning to spend billions of dollars on economic recovery through a robust infrastructure programme, as well as extending the State’s social responsibilities in the face of the novel coronavirus pandemic, the Government will not be introducing new taxes.

Dr Clarke made the announcement as he opened the 2021/22 budget debate in an environment geared to a high possibility of increased taxation primarily due to the loss of some $74 billion in gross revenues, as well as a hit from the deleterious effects of the pandemic on vulnerable Jamaicans.

He said that while 2020 was, “by far”, the most devastating year in Jamaica’s economic history, “the congregation of the faithful knew that [while] weeping may endure for a night, joy comes in the morning”.

Using the analogy of a boxer in the ring who has received a gut punch, Dr Clarke said, “…We have some abdominal muscles beneath the skin that have allowed us, as a country, to absorb those blows and remain standing.”

He said that when the pandemic hit Jamaica the Government was already prepared, based on the decisions it had made prior to having knowledge of it, which resulted in a cash cushion of some $90 billion in its funds enabling it to avoid having to increase its debt, while providing fiscal space for a response.

He said that the Government responded responsibly and prudently and immediately sought to access money from the International Monetary Fund (IMF), as well as suspended the fiscal targets and launched the largest social programme in Jamaica’s history, which provided government grants to over 440,000 Jamaicans.

He told the House of Representatives of a massive economic recovery programme, primarily built around a $31-billion infrastructure development project to provide employment for thousands of Jamaicans.

The programme will focus on the development of the country’s physical infrastructure, including the $17.7-billion spend on the completion of the south coast highway in the eastern end of the island, as well as infrastructural improvements to roads between Harbour View and Yallahs, and construction of the new toll road between May Pen in Clarendon and Williamsfield in Manchester which will continue in 2021/22.

Clarke said that the priorities for recovery continue to be: ensuring that there are adequate provisions to finance the procurement, storage, distribution and application of vaccines required to reach herd immunity, with respect to COVID-19; ensuring that social support to assist vulnerable people and those who are most affected by the pandemic are bolstered; continuing to finance the provision of the public goods and services on which the society and economy depend; the need to be able to finance an infrastructure programme to boost economic activity; and the need to be able to provide support to small businesses.

He also paid tribute to the “faith and commitment of Jamaicans, both here and abroad”, which he described as “both warming and a true testimony to the country’s resilience and fortitude”.

He said that, despite the devastation, Jamaicans in the Diaspora “did not forget or forsake” their country.

“On the contrary, as a result of their generosity and kindness, remittances grew by 20 per cent last year,” Clarke noted.

He said that while uncertainties and risks remain, and although this was the worst economic contraction in Jamaica’s history, the Government is working towards a faster economic recovery than it had considered before.

“This upcoming fiscal year will not be a repeat of the year that we are just concluding. While we cannot have the cupboard emptied, with God’s help we can bring about the future we all want to see,” Dr Clarke said.

He also congratulated the Bank of Jamaica, which has been able to turn over some $33 billion in dividends, which Clarke said was significant in terms of its profitability after years of losses, and becoming able to contribute heavily to the economic recovery programme.

Dr Clarke also noted that in the new budget year, which becomes effective on April 1, the programmed Central Government Non-Debt Expenditure of $541.3 billion for 2021/22 reflects an increase of $23 billion or 4.4 per cent, relative to the 2020/21 Non-Debt Third Supplementary Estimate of $518.3 billion. Central Government’s Non-Debt Expenditure consists of recurrent expenditure of $487.1 billion, and capital expenditure of $ 54.2 billion.

The Government’s Compensation of Employees Programme accounts for $239.2 billion of the recurrent expenditure budget, inclusive of $7.7 billion towards the expected adjustments in public sector wages during 2021/22, and $1.8 billion to settle arrears in employers’ contribution to the National Housing Trust.

The Budget Debate continues in the House of Representatives tomorrow at 2:00 pm with Opposition spokesman on finance Julian Robinson.

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