Let The (Over)Taxation Begin – Jamaica’s GCT Extends

Part of the reason why I moved back to the country I barely know or remember was because I knew that I would be able to do more and have an easier time doing it than in the US. I decided to do farming because I had always felt like the food I got in the US was just not as nutritious as it should have been because farmers there grow for yield and not for taste or health or value.

Then I saw the documentary Food, Inc. and that clinched it.

I also had this strange feeling that with the world economic crisis being what it was, food prices would continue to increase and, quite frankly I wanted to be on the producer end where I could not only feed myself but sell to the local market at farmer’s price.  Granted, toilet paper doesn’t grow on trees so I would have to buy certain amenities but raising my own livestock, growing my own fruits and vegetables meant I wouldn’t have to go too far to “shop” for certain foods.

So in light of all this, imagine my “surprise”, if you will, when my father shows me the May 25, 2012 Gleaner that stated that in order for the country grow and develop, the General Consumption Tax, GCT, would now be added on to basic foods that were previously exempt. These include eggs, Jamaican patties, live birds, animal feed, milk-based products, biscuits,…

Now, to a lot of people this sounds like no big deal. I mean, you all go to Starbucks with US$20 so US$1-US$2 is nothing, right? Well let me put some other factors into the mix. Jamaica is a developing nation where illiteracy is high and so is unemployment and some types of crime. It is more agrarian than industrial so wages here tend to be a lot lower with barely any adjustments should the market sneeze.

People may make a little money here and there to help pay for food and bills. Not everyone has a car and a lot of people need to rely on buses and taxis to get from point A to point B. There is a lot of walking in the hot tropical sun for a lot of people, myself included.

Now, because of unemployment, many people have turned to selling in the markets; essentially they’ve created their own jobs as higglers and street vendors. Points to them for taking lemons and making lemonade. They sell fruits, vegetables, legumes, hygiene products, shoes, from their carts and are an important part of the Jamaican grocery shopping experience.

What’s been happening is that the police who shop with these street vendors are running them and taking away their carts because they’re not supposed to be selling there in the market.  These people have basically been forced into entrepreneurship and are having their means on income smashed, locked up, etc. without any consideration of they have accomplished. Obviously, the law needs to deal with this but, that’s another post altogether.

Now, this entrepreneurship can be someone’s only means of income. So say they are selling and they have about $300 for lunch. For J$200 (which is a little over US$2), they could buy a Jamaican patty when they get hungry plus a drink and maybe get some change. Now, that Jamaican patty is now subject to and additional GCT along with any fruit or vegetable being sold in the market. As a result, they may need to raise their prices, may not make as many sales and that J$300 they had before for lunch may be half of what it was.

What the current government is doing is reducing the GCT from 17.5% to 16.5% and widening the taxable base; Some people will bob their heads and say, “they reduced the GCT” but basically, they are making up the 1 percentage point decrease on volume!

So those little food items people would get is going to cost them more and the same money they would have used to buy their groceries will now buy less. For those who are working, their wages will not increase to compensate for this change.

But when looking at the numbers and what’s now subject to GCT, I can’t help but see what’s NOT being mentioned. Licensing vehicles for fitness and getting plates are now subject to a 50% increase.  That coupled with a possible increase in the price of gas means that fares will have increase and as there is no school bus system, getting kids to school will now cost more in addition to home food prices. I was speaking to a neighbor who has a special needs child and a son who is going to tertiary level. The price of school books will increase. I went to university and remember paying over US$100 for my books (that’s plural) and selling them back for maybe half of that. I thought it was a racket but there was an established method in place in the US.

Jamaica doesn’t have that.

But what really strikes me is that Jamaica has no capacity to deal with special needs students. People have to pay for school here; it’s not like the US where you get your bus schedule, get picked up and go to school with your lunch money. Here, people need to pay for  their terms and special needs is not a part of that. My neighbor has to pay J$25,000 per term for private schooling to make sure her daughter gets the education she needs. But, what about those who could barely afford regular school for their children (again,  plural) who now have to face the rising cost of food (and growing children tend to inhale food), transportation and no rise in salary if they are employed?

You see people look at the numbers and say, that 1ppt decrease is good faith. I see things a little differently. This is the kind of “shit rolls down the hill” trickle down economics that will bring tears of anger and frustration. The little things add up and you’re left with a bigger problem than when you started.

I’m no financial analyst; accounting scares me and economics is better debated by Alan Greenspan and those of that ilk. However, as a former marketing analyst for a major retail corporation I was taught that the numbers tell a story. From what I’m seeing, the numbers are telling me that things are going to get more frustrating if this plan goes through as it stands. My father predicts rioting and I hate to think he’s right but…I have a feeling he’s not wrong.

My father and I are working on creating a situation where we only have to do a supply run once a month. It will take a little time but that’s one of our goals because if my father is right, the less I see of Montego Bay, the better, the safer.

Let’s see how this goes…

******************************UPDATE*****************************

Well, as my father puts it, the game is afoot! GCT is now 16.5% and the taxable base has been expanded. In the meantime, we’re planning where to plant some pineapple seedlings we got from a neighbor.

 

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Dianne Dixon, CAPM, Entrepreneur, Farmer, Blogger and Author of the Jamaican Foods Min-E-Book. She writes on a variety of subjects including Health & Wellness, Personal Development, Career & more! Follow her on Twitter: @Transitionyte

2 comments for “Let The (Over)Taxation Begin – Jamaica’s GCT Extends

  1. July 15, 2013 at 3:57 am

    All students in America have a right to an education regardless of any special needs. In and around Lawrenceville, Georgia, special needs schools fulfill this requirement. These schools are both private and public. The overriding goal is to place the student in a school that can accomodate the student’s needs.
    Franklin P. Cole recently posted…No last blog posts to return.My Profile

    • July 15, 2013 at 9:44 am

      I agree with you on that; I’m the product of an American education myself. I have seen that there is some accommodation for special needs students. But when you’re dealing with a country that wants to be America but without the hard work, it’s a challenging point to make. People have to pay for school here; that’s the fact. The government hasn’t found a way to make money other than by breaking the backs of the people. So yes, America has that capacity to an extent but Jamaica is just a little behind the 8-ball.
      Dianne recently posted…The Prison That George BuiltMy Profile

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