Wednesday, April 13, 2016
One of my father’s favourite phrases was that “It takes a fiscal cushion to do good tax reform”.
Last Monday was the sixth year since his passing, but in the context of the government’s recent tax proposals, it is again worth revisiting the reasons why the 1980’s tax reform, of which he was Chairman, was so necessary.
It is also worth remembering lessons learned from that time, in the hope that a new generation can avoid having to relearn them once again. It is also worth noting that this reform was extremely data driven, with then Prime Minister (and Finance Minister) Edward Seaga asking to review the numbers at every stage.
The January 1st 1986 reform was extremely successful, nearly doubling tax revenues in just four years, even without the imposition of the GCT (another recommendation of the original report) until the early 1990’s, following which Jamaica again briefly achieved a near balanced budget before the advent of the financial crisis.
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