Government does not have the moral authority to tax the people as they do
The 2017-18 budget debate has started in earnest with the presentation by Minister of Finance Audley Shaw. At the time of writing Opposition Spokesman on Finance Dr Peter Phillips was yet to speak. To be sure, a national budget never satisfies completely the expectations of all stakeholders or citizens in an economy. Often it is a balancing act which is not just about getting the numbers right but realising that there is a direct correlation between figures, their manipulation, and their impact on people’s lives. Portia Simpson Miller was right. It is indeed about balancing people’s lives. It is about the proper allocation of scarce resources, making the best of what one has to satisfy the greater good.
The debate on the Affordable Care Act in the United States comes readily to mind. The Republican Party has committed to the repeal of the Act and has tried to do so some 50 times in the past. Their efforts failed because it was obvious that they would not get the support of then President Barack Obama in repealing his signature policy. Under President Donald Trump, and with acknowledgment by Paul Ryan, speaker of the House of Representatives, they have the best chance of repealing and replacing the Act. Never mind that repealing it may potentially throw millions of people off their health care policies and make it harder and more expensive for others.
What is clearly at issue for Ryan and his colleagues is their single-minded commitment to repealing the Act no matter what. They say it is a commitment they made on the campaign trail and they are merely delivering what the people want. Never mind that many of those to be thrown off their policies are Republicans who, in the nightmarish presidential elections, did not focus on the implications of the Republican mania to repeal the Act.
And never mind that the burden that will visit the middle class and the poorer members of society, with the elimination of Medicaid expansion, for example, is to ensure that the richest members of the society get a tax cut. Unconscionably, the rich will benefit most from any revision of the Affordable Care Act. There will be a mighty sucking sound of money from the poor and cashless to the rich. This abominable use of the people’s resources takes no account for the burdens that it will impose on so many in the society.
Any budget that is worthy of the paper on which it is written must be cognisant of equity as far as is possible in its compilation. Since it is crafted by humans equity may be hard to come by, but no effort should be spared to ensure that this is the case.
In the context of the recent taxation measures imposed by Shaw, significant questions are being raised as to the equity of the measures indicated. For some sectors the measures are unconscionable and unsustainable. Still, for others, especially those who will benefit from the new tax threshold, there may not be much to gripe about, except when they drive up to the gas stations and find that they are paying more for the precious commodity. The same is true when they have to deal with their masters at the Jamaica Public Service and the National Water Commission as the tax on fuel hits home.
There is a disturbing aspect of taxation in Jamaica that has bothered me over the years. It is what appears to be the ministerial fiat that the minister of finance has to impose tax measures without the scrutiny of Parliament. What presently obtains is that the minister of finance, with the obvious support of the Cabinet, takes the decision on the measures to be enacted and the Parliament merely rubber-stamps the decision. The measures are not robustly debated by the people’s representatives and decided on by them. When they get to vote the proverbial horse has already gone through the gate.
This is without doubt taxation without representation, for the people’s representatives do not get a chance to debate the measures before they are visited on citizens, often like a Nicodemus in the night.
If Dr Omar Davies, when he served as minister of finance was subject to this parliamentary scrutiny, he would have been more careful to "run wid it" to support electioneering outcomes as he would have had a hard time justifying this recklessness to his parliamentary colleagues. One wonders if there was anyone in the then Cabinet who disagreed with his actions.
In the present iteration, Shaw would have been dissuaded from imposing tax on the motoring public as he did. Perhaps he might have seen the wisdom of the unnecessary burden of imposing taxes on motor vehicle licences and other related fees simply to raise, in the scheme of things, a measly $464 million. He might have been forced to realise the immediate impact this would have on the public, many of whom did not calculate this into their already struggling budgets and considering that its impact would be immediate. Not only is such action not economically feasible but politically unwise. What is there really to be gained politically from enacting a tax policy to raise a negligible $464 million from the travelling public? The minister might have been better served if he had dovetailed this sum into increased tax compliance, instead of setting it forth as a new tax to be collected, thus putting unnecessary burden on people.
But when you have the ability legally to impose taxes with impunity, what is $464 million on the poor driver who has only a weekend to find the increase? Who cares about deficits when you can "correct" profligate spending to win an election when the time comes? This practice must stop. But this will only happen when the people are enraged enough to insist that it does. But it cannot inure to good policy to have a minister of finance, however well intentioned, imposing taxation without the direct input, oversight and decision of his or her parliamentary colleagues. A better mechanism can and must be found.
It has become axiomatic that neither political party that has governed the country since 1962 has the moral authority to castigate the other on taxation measures imposed on the people since Independence. They both have used the power at their disposal to levy taxes with impunity and then squander the revenue thus derived, often to suit partisan ends. It is sickening sometimes to hear the diatribe coming from the Opposition side of the aisle as to the wickedness of the taxes imposed by the incumbent Government only to do worse when they get their hands on the till. The people must insist that if they are going to be taxed they should have a say in it.
As could be expected Dr Peter Phillips has already declared that Shaw opened the gates of hell to unleash the demons of taxation on the Jamaican people. What he has conveniently forgotten is his own taxation policy in the last Administration for which the International Monetary Fund’s harsh conditionalities were made the scapegoat. The question is what would he do better if he should ever been given the privilege to sit in Jamaica House. Which of the two major political parties that have governed the country really has the moral authority to tax the people? We must all grow up.
Dr Raulston Nembhard is a priest and social commentator. Send comments to the Observer or