Will Jamaica grow from Shaw’s budget?

I listened with great interest to hear what might be contained in the presentation by the Finance Minister Audley Shaw.  The first parts of the presentation focused on what had been done to stabilize the economy and detailed the current state of the country.  The final part focused on some minor tax changes to be made.  This included the reduction of stamp duty on several financial transactions designed to reduce the cost of borrowing.  In addition estate taxes were reduced in an effort to clear the backlog in probation of wills.

 The thrust of the presentation seemed to be that the government has provided an environment which will facilitate the growth of the economy.  The emphasis is then placed on companies and individuals to take advantage of these conditions.  There was a passing mention of a consideration of a tax credit for companies which employ new staff but no details were provided.  I would agree that the stability that is currently being provided is an encouragement to stimulating growth.  However I do not believe that the government can leave it entirely up to investors to start production.

What was missing was any efforts/incentives to be provided by the government to encourage persons to get into production.  One of the tools that could be used is that of tax waivers and holidays.  For too long these have been applied too narrowly with too many of them going to the hotel sector.  Tax waivers/relief could be given to persons who go into agro processing, green house technology, manufacturing, etc.  The idea is to persuade investors to get involved in production.  In this regard the use of credits for hiring previously unemployed persons would work well.  Initially the government gives up some revenue but gets back a portion through statutory deductions, GCT on purchased goods and company tax on profits. 

Incentives could also be given for establishing businesses in depressed areas where there is currently little or no business activity.  There are many rural areas such as St. Thomas, Hanover and St. Mary that need more companies operating there. This would have the additional benefit of reducing urban migration where persons leave the country side to come to urban areas looking for work.  The development of the pier in Falmouth is one such example of this idea and I would like to see others.

In addition the provision of more technical assistance to those wishing to go into business can help to stimulate growth.  Many companies/organizations fail because the owners do not understand all of the things that are required in order to have a successful business especially the need for keeping proper financial records.  The assistance of the financial sector in this area would be a great help.

 It is not enough to simply contain expenditure, the solution for this country is economic growth and we welcome any ideas that will help us to achieve that goal.