PIOJ Growth-Inducement Strategy - Planning Institute of Jamaica

is reported to have increased by J$6 billion this year, to J$24 billion or one-third of the
JDX’s annual savings. We need to tackle this phantom debt, before it comes back to
haunt us. Leaving this situation unaddressed is unacceptable. We need a contributory
scheme for public sector workers now and not a Jamaica pension exchange later.
Secondly, we must resist the temptation for large public spending to stimulate growth.
The Growth-Inducement Strategy calls for J$14 billion of spending. Some already
announced and all worthwhile. That said, we caution strongly that any large-scale
spending campaign beyond these levels would be unwise. The Pre-JDX era is still fresh
in our minds, as are the sacrifices the private sector was asked to make. Any one-off, adhoc
projects that would threaten our fiscal commitments would break this covenant and
be bad for economic growth.
Thirdly, immediate and wide-reaching tax reform is critical and our preferred stimulus.
The Growth-Inducement Strategy lists tax reform as a medium-term measure, though it
does list some tax items in the immediate term. We believe that the time for immediate
and wide-ranging tax reform is now. We endorse wholeheartedly, the PIOJ’s call to
remove stamp duty on loans that are refinanced and believe it will lower borrowing rates
for average Jamaican consumers and businesses. But we would go further and suggest
the following for immediate action.
Firstly, lower the GCT rate significantly. If done in conjunction with removing
exemptions, it will be revenue neutral, and will provide a large stimulus to the
economy and create a permanently simpler system.
Secondly, unify external tax and tariff rates. With the myriad of rates and the
expensive system of administration, the average statutory and collected rates are
astonishingly low.
Thirdly, unify and simplify the structure and you will not only have a simpler, less
corrupt and cheaper system to administer, but you will collect more revenue. It’s
a no brainer and a game changer.
Fourthly and finally, if we do not lower our cost of energy, we will not have high
rates of growth, full stop.
While the Growth-Inducement Strategy proposes net metering and net billing, we believe
this is not enough. We need aggressive policy measures focused on lowering the cost of
generation and changing the regulatory framework so that consumers and business pay 20
cents per kilowatt hour instead of 30 cents. We understand that this topic is “charged”,
but you can count on the PSOJ’s support.
4.0 Conclusion
In conclusion, we congratulate the PIOJ on its work in preparing the Growth-Inducement
Strategy. The document is a well-crafted and well-designed set of policies which we
believe can produce high rates of growth. Nevertheless, it’s still a document. Our
President likes to say that Jamaica is the most studied economy in the world, and he’s
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