POLICY PIVOT
Holness promises aggressive growth strategies in march to general election
Published:Wednesday | November 20, 2024 | 7:18 AMJovan Johnson/Senior Staff Reporter
Consideration for the removal of taxes on tips and an efficiency committee headline the Holness administration’s pivot towards boosting economic growth, setting the stage for a potential policy showdown with the Opposition ahead of a general election due within nine months.
In a 90-minute policy address on Tuesday, Prime Minister Holness stated that Jamaica had achieved “economic stability”, and that it was now time to enter a new phase of “inclusive growth” where every Jamaican can realise their dreams and aspirations.
The statement, which comes just about seven months after his Budget speech and ahead of Sunday’s address at the Jamaica Labour Party (JLP) annual conference, was dubbed ‘Next Chapter – Pivot to Inclusive Growth’.
The backdrop of the speech includes a recent opinion poll showing the ruling JLP that he leads trailing behind the Opposition, unrest in the key tourism sector with several worker strikes, widespread protests over poor road conditions, and concerns raised by former Finance Minister Dr Nigel Clarke regarding the economic impact of a recent hurricane and a US travel advisory, which could lead to a contraction. Despite macroeconomic stability, there are concerns that the benefits are not reaching everyday Jamaicans.
However, he emphasised that Jamaica is now in a position to focus on aggressive growth, with the debt-to-GDP ratio projected to drop to 64 per cent by April 2025, the lowest since 1976, providing more room for public spending. Jamaica has also achieved record-low unemployment at 4.2 per cent, improved international credit ratings, and 20 consecutive quarters of positive – albeit modest – economic growth.
The policy shift is built on six pillars: human capital development, economic diversification, infrastructure development, reducing red tape, improving safety and security, and fostering inclusive development.
REVAMPING TAX CREDIT SYSTEM
The administration is contemplating revamping the urban renewal tax credit system to expand geographic areas that could benefit; removing of taxes on tips in the hospitality and service industries, increasing the threshold for small businesses to register and account for GCT; establishing a national infrastructure fund to manage and fund public-private partnerships and tax write-offs on certain technologies to incentives adoption by businesses, the prime minister said.
Finance Minister Fayval Williams will address the funding question in her Budget presentation next year, but Holness insisted the plans will not threaten the debt-reduction strategy.
“Most of what we’re doing will be revenue neutral. We’re trying to make sure that it does not add an additional tax burden,” he said.
The creation of an ‘Efficiency Programme Oversight Committee’ will lead efforts to reduce inefficiencies within the public sector, Holness said. In a likely reference to US President-elect Donald Trump’s recently proposed department of efficiency, Holness said the Jamaican committee was in the works long ago.
“The Jamaican bureaucracy has become self-serving. It’s there to cross the Is and dot the Ts and has no concern as to whether or not the country grows. That must change ... . I cannot pivot without dealing with the muscles of the athlete, which is the bureaucracy. That is what gets the things done,” he said.
Holness stated that certain laws and regulations would be amended to align with these new goals.
“No other nation in the world has matched the scale of Jamaica’s economic turnaround in just under a decade. From being dismissed as a basket case, Jamaica is now celebrated as a global model of resilience and fiscal reform,” he told a Jamaica House lobby of senior civil servants and some of the country’s most prominent business leaders.
Jamaica can no longer rely on adding new people to drive growth and must shift focus to productivity, Holness stressed.
“Productivity is about working smarter. Unfortunately, there are those, who when they hear the term productivity, they immediately think that we are asking them to work hard for the same pay or less.”