The children of Sisyphus

The gods had condemned Sisyphus to ceaselessly rolling a rock to the top of a mountain, whence the stone would fall back of its own weight. They had thought with some reason that there is no more dreadful punishment than futile and hopeless labour. - Camus –The Myth of Sisyphus [1942]

Two stories in yesterday’s edition of The Barbados Advocate, both emanating from the proceedings of the International Monetary Fund [IMF] High-Level Caribbean Forum in Kingston, Jamaica during the past week, demonstrate the Sisyphean nature of the regional efforts towards self-sufficiency, poverty alleviation, full employment and a better life for its citizens generally.

In the first report, a number of the regional leaders agreed with the assessment of the Managing Director of the Fund, Christine Lagarde, that “the practice of offering tax incentives over long periods to lure investors, [while] deeply entrenched in the culture of governments across the region were actually hurting these jurisdictions, given the low levels of growth being experienced”. To a man seemingly, the regional leaders present spoke out against this practice that has also been a partisan bone of contention locally with the Sandals investment.

Prime Minister Holness of Jamaica considered that “we have to make decisions that are not just fair to the corporate bodies, but fair to the people who are expecting some benefit from an investment that will lift them out of poverty”. Of a similar view was Deputy Prime Minister Turnquest of the Bahamas who intimated that his country was “seriously assessing its tax incentive policy” with a view to reducing some of the benefits it offers to investors. Prime Minister Mitchell of Grenada seemed less emphatic in his observations. He would rather have the matter discussed at a regional level, even though he conceded that the issue had been a problem in the Caribbean.

We are mindful that the regime of tax incentives offered to foreign investors is perhaps the sole effective mechanism to lure them to the region, although this may be the origin of the charges of “tax haven” being levelled at some regional jurisdictions. We are not certain either that our response of claiming to be a low tax jurisdiction rather than a tax haven is taken with less than a pinch of salt by these cosmopolitan jurisdictions from which the investors emanate.

Yet, herein lies the rub. For while these incentives are designed to be for the ultimate benefit of the citizenry with regard to increased job opportunities and national growth, it does not appear that either of these has been the consequence to any significant degree thus far. It is here that the second report impinges on the discussion. According to this, Lagarde noted that youth employment in the region, reputed to be the highest in the world, and the unusually high rate of joblessness generally, provide a “major obstacle to economic growth. She cites in support of her proposition an Inter-American Bank study to the effect that crime in the Caribbean costs the region four per cent of GDP annually, a substantial expense for a largely depressed economy. The link is clear. Strong growth would reduce unemployment and probably the incidence of crime that would, in turn conduce to an attractive environment for investors.

However, if we are now wary of providing tax incentives to investors since this is being viewed as largely ineffective and unethical, and since such investment is necessary for growth and reduced unemployment, then unless we find some novel means of attracting foreign investment we are, like Sisyphus, merely rolling a stone up a hill for it to come back down and hurt us or, in the less painful and more regional vernacular, “only spinning top in mud”.

Barbados Advocate

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