Identifier
Created
Classification
Origin
08KINGSTON539
2008-06-12 19:15:00
UNCLASSIFIED
Embassy Kingston
Cable title:  

JAMAICA: FINANCE MINISTER SAYS NO MORE LIP SERVICE

Tags:  ENRG EINV SENV ECON ETRD EFIN XL JM 
pdf how-to read a cable
VZCZCXRO7959
RR RUEHGR
DE RUEHKG #0539/01 1641915
ZNR UUUUU ZZH
R 121915Z JUN 08
FM AMEMBASSY KINGSTON
TO RUEHC/SECSTATE WASHDC 6458
INFO RUCNCOM/EC CARICOM COLLECTIVE
RUEHFT/AMCONSUL FRANKFURT 0225
RUEATRS/DEPT OF TREASURY WASHDC
UNCLAS SECTION 01 OF 02 KINGSTON 000539 

SIPDIS

STATE FOR WHA/CAR (JTILGHMAN) (VDEPIRRO)
WHA/EPSC (LKUBISKE)
EEB/ESC/IEC (GGRIFFIN)
SANTO DOMINGO FOR FCS AND FAS
TREASURY FOR ERIN NEPHEW

E.O. 12958: N/A
TAGS: ENRG EINV SENV ECON ETRD EFIN XL JM
SUBJECT: JAMAICA: FINANCE MINISTER SAYS NO MORE LIP SERVICE

REF: A) KINGSTON 490
B) KINGSTON 343
C) KINGSTON 286
D) 07 KINGSTON 1748

Summary
-------

UNCLAS SECTION 01 OF 02 KINGSTON 000539

SIPDIS

STATE FOR WHA/CAR (JTILGHMAN) (VDEPIRRO)
WHA/EPSC (LKUBISKE)
EEB/ESC/IEC (GGRIFFIN)
SANTO DOMINGO FOR FCS AND FAS
TREASURY FOR ERIN NEPHEW

E.O. 12958: N/A
TAGS: ENRG EINV SENV ECON ETRD EFIN XL JM
SUBJECT: JAMAICA: FINANCE MINISTER SAYS NO MORE LIP SERVICE

REF: A) KINGSTON 490
B) KINGSTON 343
C) KINGSTON 286
D) 07 KINGSTON 1748

Summary
--------------


1. (U) Jamaica's Minister of Finance and Public Service, Audley
Shaw, spoke to a crowd of investors at the Jamaican Money Market
Banking (JMMB) financial forum June 10. He highlighted ongoing
efforts to improve Jamaica's tax efficiency, but also spoke about
energy security and expanding commercial banking services. Shaw
proclaimed, "No more lip service" in relation to major adjustments
needed by the Government of Jamaica (GOJ) to improve good governance
and transparency.

--------------
Tax Efficiency
--------------


2. (U) Shaw's speech emphasized improving the efficiency of
Jamaica's tax system, primarily by increasing compliance rates and
his taxpayer amnesty program (reftels A and B). (Note: early
indications are that Shaw's tax amnesty is working: revenue for the
first month of the fiscal year is 13.2 percent above projections and
29.5 percent above the same period last year. End note.) In an
effort to make improvements in the tax system, Shaw promised
audience members, that "the GOJ would hold-up its end of the bargain
and make noticeable improvements to roads, hospitals, schools, and
running water with the extra tax revenue generated from higher
compliance rates."

--------------
Corporate Tax Must Be Paid
--------------


3. (U) Shaw continued his pitch for higher tax compliance by asking
for a partnership between the Jamaican business community, which
historically has had dismal tax compliance rates, and the GOJ. Shaw
said, of the USD 840-910 million in tax arrearages, 68 percent is
owed by corporate tax payers. He promised the private sector
visible results from increased tax revenue generated by their
compliance and, with their help, a reduction of corruption. New
services will include electronic tax paying and faster service at
tax offices to ease the process of paying tax bills. (Note: Tax
payers currently complain of waiting in line two hours to pay their
bills). Shaw said once compliance was up he would harmonize the
corporate tax rate and personal income tax rate. He also promised
reform in Jamaica Customs under the new Commissioner Danville
Walker; radical changes were needed in the customs office.

--------------
Energy Security
--------------


4. (U) Shaw spoke passionately about necessary changes and
opportunities in the face of Jamaica's energy crisis; the country
must reduce its excessive dependency on imported oil and improve the
efficiency of oil usage. He stated, "Jamaica can longer give lip
service to energy conservation," and said the slowdown of energy
consumption wasn't aggressive enough. Shaw sees great investment
opportunities for Jamaica in alternative fuels. He said he recently
had visited Frankfurt, Germany looking at potential options for
offshore wind energy project with the European Investment Bank
(EIB),which was offering interest rates of 3-4 percent for such
projects. Shaw also mentioned the GOJ's efforts for a sugar-based
ethanol project with Brazilian firm Infinity Bio-energy (reftel C).


--------------
Commercial Banking Needs Competition
--------------


5. (U) Shaw also touched on the expansion of the commercial banking
community in Jamaica, saying the sector needs more competition: "We
have had too many excuses why we can't close the spread between
lending rates and borrowing rates in this country." He called for
diversification of the financial services and investment options
available in Jamaica. He said he wanted to see more investment
banking, mutual funds, hedge funds and financial instruments like
derivatives in Jamaica. He also announced that JMMB as well as
other banks had recently applied for commercial banking licenses.
Note: The wide spread between commercial loans and interest paid on
deposits has been a source of tension and resentment for years in

KINGSTON 00000539 002 OF 002


Jamaica (reftel D) End Note.
HEG