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Thursday, December 12, 2013

Mandela is an unsurpassable example for Latin America and the Caribbean

• Speech given by Army General Raúl Castro Ruz, President of the Councils of State and Ministers, at the funeral honors for the historic leader of South Africa, Nelson Mandela, in Johannesburg, December 10, 2013, Year 55 of the Revolution

President Jacob Zuma:

Family members of Nelson Mandela:

High ranking dignitaries:

Sister people of South Africa:

Full of emotion, we pay tribute to Nelson Mandela, who is recognized as the supreme symbol of dignity and unyielding dedication to the revolutionary struggle for freedom and justice; as a prophet of unity, reconciliation and peace.

Together with his comrades in struggle, he led his people in the battle against apartheid, in order to open the way to a new, non-racial South Africa, united in the search for happiness, equality and the well-being of all its sons and daughters, and to overcome the consequences of colonialism, slavery and racial segregation.

An example of integrity and perseverance, he then led the effort directed toward the elimination of poverty, the reduction of inequality and the creation of opportunities for all.

Mandela is an unsurpassable example for Latin America and the Caribbean, which are advancing toward unity and integration to the benefit of their peoples, respectful of their diversity, with the conviction that dialogue and cooperation are the way forward for the solution of differences and civilized cohabitation among those who think differently.

Humanity cannot respond to the colossal challenges which are threatening its very existence, if it does not do so through a new coordination of efforts among all nations, such as the life of Mandela extols.

Cuba, which has African blood in its veins, rose up in the struggle for independence and for the abolition of slavery and, subsequently, has had the privilege of battling and building together with African nations.

We shall never forget Mandela’s moving tribute to our common struggle when he visited us on July 26, 1991, and stated, "The Cuban people hold a special place in the hearts of the people of Africa."

A symbol of the sisterhood between Africans and Cubans, I recall his close friendship with Fidel Castro, who affirmed, "Nelson Mandela will not go down in history for the 27 consecutive years he spent incarcerated without ever renouncing his ideas; he will go down in history because he was able to expunge from his soul all the poison that such an unjust punishment could have created; for the generosity and wisdom with which, at the hour of the already uncontainable victory, he was able to so brilliantly lead his self-sacrificing people, knowing that the new South Africa could never be constructed on the foundations of hatred and vengeance."

Eternal honor and glory to Nelson Mandela and the heroic people of South Africa!

Thank you very much.

December 11, 2013


Tuesday, December 10, 2013

The potential impact of value added tax (VAT) on The Bahamas

IDB: VAT will lead to higher growth, lower debt, lower unemployment IDB study assumes all additional revenue goes to paying down debt

Guardian Business Editor
Nassau, The Bahamas

Although projected to lead to a decline in disposable income at all levels, a newly-released model prepared for the government projects that value-added tax (VAT) will lead to higher gross domestic product (GDP) growth and tax revenue, decreased debt, lower unemployment and lower inflation after an “initial surge” in the first year.

The model and accompanying report, prepared by the Washington, D.C.-based Inter-American Development Bank, suggest that real GDP growth will be higher relative to baselines once VAT is implemented “especially” if VAT is implemented at 15 percent.

Lower unemployment is anticipated by the IDB model in light of a projection of higher tax revenue and the assumption that with this, there would be lower levels of government borrowing which would make it easier for the private sector to borrow, invest and stimulate employment.

Meanwhile, the expectation of a decline in public debt levels is said to depend on the assumption that all of the “additional revenue” generated through fiscal reform would be “directed toward debt reduction”.

The IDB study supports the government’s claims that VAT will lead to no more than an additional three to four percent rise in price levels above normal inflation in the first year, and has been taken by the government to support the case for the implementation of VAT as the cornerstone of the government’s fiscal reform program aimed at reducing debt levels.

However, the IDB states clearly that VAT, particularly at 15 percent, as opposed to a lower rate, would have a detrimental effect on poverty levels without increases in social spending.

Released on Friday along with an accompanying report, it was prepared on behalf of the government to ascertain the potential impact of a VAT on The Bahamas.

“Tax reform cannot be defined and put in place without in-depth studies of its impact on growth, income distribution, fiscal cost, economic efficiency and a comprehensive tax policy and administration reform. Transparency and predictability rest on the best possible estimates of the revenue consequences of reform that available data allows,” states the IDB report.

In this regard, the model looks at the effect of VAT at varying rates on economic growth, inflation, tax revenue, public debt, poverty, employment and the distribution of income.

It has been much anticipated by the Coalition for Responsible Taxation, which is hopeful of using it in particular to look at what VAT’s impact would be on the economy but also what the potential alternatives might be.

The model, described by the IDB as an “economy-wide” one that “describes the behavior of producers and consumers and the linkages among them”, will be shared with members of the coalition, along with staff from various government agencies, today.

The government said in a statement accompanying the release of the study that it supports its plans to implement VAT on July 1, 2014.

“The study predicts that the introduction of VAT, alongside other reforms to reduce the public debt, would have positive economic and fiscal benefits.

“The IDB’s results are consistent with expectations for the type of fiscal reform package that is being considered for The Bahamas. Reducing distortionary taxes on business activities, and placing more direct emphasis on consumption taxes, would stimulate a projected increase in national savings and investments.

“The private sector investment climate would also benefit from expanded access to financing that would no longer be needed to fund government deficits. These are forecasted to contribute to stronger growth potential and reduced unemployment, which would be felt across all broad sectors of the economy.”

The Coalition for Responsible Taxation declined to comment on the results of the study yesterday, which were presented in a 165-page report published on the government’s website.

Robert Myers, co-chair for the coalition, said he would reserve comment until he had met with the IDB today and had a “better review” of the document.

Speaking prior to the release of the study on Friday afternoon, Gowon Bowe, co-chair of the Coalition for Responsible Taxation, said the group was eagerly awaiting the model, and in particular, whether it predicts the possibility of economic growth and only moderate price level increases as the key determinants of whether the private sector advocacy group can accept value-added tax (VAT) as a solution to the country’s fiscal challenges.

“That’s a piece of information that is an integral part of looking at how it will impact the economy. The most important thing is to look at empirical information now to make a determination; there’s been a lot of emotion that’s gone into it up to this point,” said Bowe.

He added: “The pipe dream would be that the model says we would have economic growth with minimal price increase impact. I think there’s sufficient experience that when you take money out of the economy through tax that has a negative impact on economic growth because you are taking money out of the pockets of consumers, but what we will be looking for is whether the price increase is not as high as 10 to 15 percent, which a lot of us are concerned about, and that it is based on good data and is a reliable model. That will give a level of assurance that [VAT] would be positive and not negative.”

However, Bowe noted that the coalition would still harbor concerns about the capacity of the government to successfully administer the VAT, notwithstanding that ministry officials “have placed great hope in the inherent checks and balances in a VAT system”.

The study looks at 16 alternative scenarios, which involve applying different rates of VAT, hotel tax, average import tariff rates and social “safety net” spending, with VAT ranging from 7.5 percent to the proposed 15 percent.

It does not appear to specifically address the question of what happens under a scenario in which there is significant non-compliance or ineffective administration of the VAT, a point which the coalition and other private sector stakeholders have expressed concerned about with respect to VAT.

It also does not appear to consider the potential outcomes should the government not direct all additional revenue from VAT implementation towards reducing its debt levels.

December 09, 2013


Sunday, December 8, 2013

Russia had no stomach for the Grenadian revolution



IT is often said that the marginal Marxist-Leninist Caribbean state of Grenada under Maurice Bishop's New Jewel Movement (NJM) of 1979-1983 was a satellite of Russia. But many readers of this column may be surprised to learn that Moscow had no desire to aid the spice island economically or otherwise, at levels the native revolutionaries expected.

Shortly after seizing power on March 13, 1979, the NJM's expectation of fraternal assistance from Moscow went into overdrive based on the assumption that communist countries had a greater concern than the West for the plight of Third World peoples.

BISHOP… seized power on March 13, 1979
And given the large cache of Russian-made guns, ammunition and military hardware that found their way in the control of the People's Revolutionary Army (PRA), the outside world also formed the impression that Russia was backing, unconditionally, the aims and objectives of the revolution.

But documents on Grenada-Russian relations released by the United States, after the 1983 invasion which it dubbed 'Operation Urgent Fury', tell an interesting story: Moscow did not want, nor could it afford, any more Cubas in the Caribbean.

Though somewhat dated, the documents referenced the deep involvement in the revolution of several prominent middle-class Jamaicans who are today comfortably ensconced in academia and the private sector with possible knowledge of how Bishop and some of his Cabinet colleagues were murdered and the location of their remains.

The documents also show Moscow's reluctance to commit itself to the Grenadian revolution to the same extent it did for the Cuban revolution 20 years earlier. This means that the Grenadian revolution was running on ideological fumes only for much of its existence.

"The Soviet Union is very careful, and for us sometimes maddeningly slow, in making up their minds about who to support," the Grenadian ambassador to Russia at the time is quoted as saying in the documents.

We can only imagine how disappointed Bishop and his band of revolutionary leaders must have been on learning of this Russian foreign policy attitude towards their country, given that in capturing State power they clearly felt that they qualified for Russian aid and support far beyond the levels that were actually forthcoming.

After all, the NJM had modelled itself on the Soviet Communist party even before it took State power, and in the United Nations, Grenada's voting pattern under the NJM favoured Moscow on important issues, more than other Third World Socialist-oriented states.

Even the NJM's party structure followed a Leninist pattern: a Politburo, Central Committee and the rest. The ruling party also had overriding control over the army, and imposed strict censorship on the media.
So, what could have prevented a major injection of Russian aid and support for revolutionary Grenada? Why wasn't Grenada benefiting from Russian developmental aid to the same extent as Cuba, which was estimated then at US$6 million per day?

Truth be told, the Grenada revolution came about at the wrong time, because the cost of Cuba was a price Moscow paid as a result of Russian policies in the Third World under Kruschev. In the post-Kruschev era in the early 1980s, the Russian leadership was far more cautious and selective in choosing the recipients of Russian economic aid and had become increasingly more cost-conscious and economically more self-interested. On reflection, Russian foreign policy was about concentrating on the problem of protecting established Soviet positions.

Russia's lack of involvement in the construction of the Point Salines International Airport (renamed appropriately the Maurice Bishop International Airport in 2009) bears this out. The airport project was the NJM's major economic preoccupation, and was the priority heading on the agenda of most Central Committee meetings, as well as being the main plank of the first Five-Year plan. The ruling party had hoped that the airport would go a long way in boosting the island's tourism trade and foreign exchange reserves.

But when Bishop, in a meeting with Russian Foreign Minister Andrei Gromyko in April 1983, appealed for a Russian grant of US$6 million toward the airport project, the Russians turned down the request. Ultimately, the NJM had to turn to western donors for the funds to boost construction of the airport.

Bishop had even expected the Russians to purchase 1,000 tons of nutmeg on an annual basis. But the Russians replied that Moscow was only willing to import what it consumed each year, about 200-300 tons, and then "only at the world market price or below".

What is clear from all of this is that post-Kruschev Russia was not prepared to bail out the Grenadian economy, despite the fact that trade relations between the two countries had increased slightly. Neither was Grenada, under Bishop, blessed with observer status in the Council for Mutual Economic Assistance (CMEA) — a status Mexico had enjoyed for a number of years.

Kruschev clearly had global ambitions for Russia in a practical sense: he considered the support of nationalist Third World leaders as a way of increasing Russia's role in the international political system outside Eastern Europe. Hence, by 1956, Moscow had begun to establish diplomatic relations with all Latin American states on the basis of non-interference in each other's domestic affairs and to develop a broad range of economic relations on the principle of equality and mutual advantage.

In the final analysis, Russia did not support hardline policies in Grenada during the period of the counter-revolution when Socialism became equated with murder and mayhem.

To be sure, it did not condemn the Bernard Coard faction, as explicitly as did Castro, for its part in provoking the split in the NJM's leadership and putting Bishop under house arrest.

Such was the character of Russian foreign policy towards Grenada in the early 1980s. Moscow was able to provide loose political and ideological support for the NJM while not committing itself to providing assistance in the reconstruction of the Grenadian economy or in defence of the revolution from counter-revolutionary forces — home-grown and foreign.

December 08, 2013

Jamaica Observer

Wednesday, December 4, 2013

The Bahamas government's Value Added Tax (VAT) option in a fiscal crisis environment

Why VAT and When?

Nassau, The Bahamas

Arinthia KomolafeThe Ministry of Finance (MOF) released the draft Value Added Tax (VAT) Bill, draft Value Added Tax Regulations 2013 and Guide to VAT legislation.  This release follows weeks of clamor and demand by various stakeholders.  In the days ahead, it is expected that the public discourse on this crucial component of our tax reform program will intensify as we begin to decipher the documents and properly assess the impact it will have on The Bahamas and Bahamians.

Consultation on VAT

A quick review of the draft VAT Bill will confirm what a number of Bahamians had known in relation to the initial discussions between the government and various industry groupings.

This observation is apparent by a simple comparison of the proposals contained in the white paper released in February 2013 and positions proposed in the draft VAT Bill.  It would be disingenuous therefore to suggest that the consultation period has only just begun with the release of the draft documents.  While none of the concessions agreed upon or compromises made during initial discussions could be said to be concrete or documented before now, it is apparent that the MOF had chosen to incorporate some of the portions agreed with the various sectors, associations and interest groups into the draft that was released last week Friday.

The arguments put forward

The discussion on the introduction of VAT has been predictable until recently.  As was expected, the government has sought to articulate the importance of broadening its tax base to increase revenue as part of its fiscal consolidation plan to correct the country’s fiscal imbalance.  The MOF in leading this charge has highlighted the critical condition of The Bahamas’ finances and submitted that VAT is the best option for boosting government revenue at this point, bearing in mind that tariff rates must be reduced and trade barriers addressed if we are to accede to the World Trade Organization (WTO).

It has been stated and noted that The Bahamas remains the only country in the Western Hemisphere that is not a member of the WTO and the government has warned that this puts us at a competitive disadvantage from an international trade perspective.  While the government has stated its commitment to curbing its spending and reducing subventions to its agencies and statutory bodies, the impact of reducing the public service with the current unemployment figures has been outlined using statistics on the multiplier effect on the economy and consumer spending by the MOF.

On the other hand, the private sector had taken the position that the government need not introduce new taxes but rather focus on cutting its expenditures and efficiently and effectively collect existing taxes including those that remain outstanding.  The private sector had further suggested that the introduction of VAT at this juncture, considering the current economic climate, would be inappropriate and further slow down an economy trying to fully recover from the Great Recession.  A reduction in the size of government, cutting of the public sector workforce and divesting of state-owned enterprises have also been recommended in a bid to address the GFS deficit and national debt.

The meeting of the minds

Our ability to come together in a non-partisan manner in times of crisis for the common good of our beloved country and future generations of Bahamians has become pronounced in recent times. While it is our hope that this is not an isolated development, it is imperative that we applaud the Tax Coalition of the Bahamas Chamber of Commerce and Employers Confederation (BCCEC), the opposition party and other economic experts for what appears to be a willingness to contribute to the discussion and work with the government to address our fiscal crisis.

While enough blame for our current precarious fiscal position can be placed on successive administrations responsible for the governance of The Bahamas, the Tax Coalition was right in stating that we are all responsible for this predicament and all Bahamians have a role to play in solving our financial woes.  James Smith, former governor of the Central Bank and former minister of state for finance, on his part had reiterated that tax reform, and more specifically the implementation of VAT, will not be without pain.

The meeting of minds on the seriousness of the state of affairs of our finances and the consequences of not embarking on an urgent correction program must precede any logical discussion on the structure, details and specifics of the tax reform framework.  As we appear to have arrived at this point, hopefully the discussions will be elevated to ensure that all parties adhere to their commitments in returning The Bahamas to better financial health and prevent any further downgrades by international rating agencies, multilateral organizations and any potential loss of investor confidence in our economy.

At the core of this matter is the realization that successive administrations have with the help of local and internal experts considered the issue of tax reform and VAT for several years; however, the fortitude to confront the proverbial elephant in the room has been lacking until now albeit this has been spurred by the desperation created by the predicament we find ourselves in.

Preparing for VAT

As the July 1, 2014 proposed VAT implementation date approaches, enough has been said about the need for public education.  Ironically, it has been reported that the turnout for the educational and informational sessions held by the MOF to date have not been too impressive.  The MOF has promised to strengthen its VAT education and awareness campaign in the weeks ahead.  However, it is important that all stakeholders get involved in this process following the release of the VAT governing documents.  The media, industry associations, regulatory agencies, business entities and Members of Parliament will have to play significant roles in enlightening the masses in what is perhaps the most substantial change to our tax system in decades.

The private sector must also ensure that their concerns are documented and brought to the attention of the government.  It would be a worthwhile exercise to properly review the draft legislation with a view to providing constructive criticism and useful recommendations to improve the draft bill.  Business entities will also need to invest their time and resources into understanding what VAT will mean in the context of their operations.

Finally, the general public must fully recognize and appreciate that VAT is a consumption tax; that is, it taxes us on what we consume.  The final consumer will bear the ultimate burden of VAT and hence we must familiarize ourselves with the various goods and services that are subject to 15 percent VAT, 10 percent VAT, exempt status and zero-rated status.  Attendance at upcoming briefing and educational sessions on VAT by all Bahamians and local residents is therefore encouraged by this writer.

The VAT challenge

Regardless of where the VAT debate takes us in the months ahead, we must remember that there is hardly any gain without pain and there is seldom triumph without trials.  Indeed, in Christianity we often state that where there is no cross there is no crown. I n this sense, the days ahead will have challenges but we must look beyond these to the future of our Bahamaland and work towards restoring her by putting country first.

That being said, the government must double its efforts to simplify the VAT debate for the average Bahamian.  The MOF must work tirelessly to consider and address all concerns raised by the public during the consultation period.  The relevant systems must be put in place and resources engaged to ensure the effective and efficient administrative of VAT.  More importantly, the government must continue to demonstrate commitment to fiscal prudence and containment of expenditure.

If our country fails, we all fail, as we have nowhere else to call home or to claim as our own.  It would be illogical not to state that no amount of preparation can guarantee a hitch-free implementation, and the introduction of VAT will not be perfect. The record shows that other countries have had challenges in spite of having devoted years to preparation.  We must be determined to make it work and co-operate with one another if The Bahamas is to emerge successfully from this fiscal crisis.  In the final analysis, the government will have to unequivocally convince the public as to why VAT is the best option at this time and confirm the implementation date.  One thing is certain: The urgency of now does not provide us with much time.

• Arinthia S. Komolafe is an attorney-at-law.  Comments on this article can be directed to

December 03, 2013


Tuesday, December 3, 2013

The history of ganja and the Jamaican society is interesting and instructive

The ganja law of 1913: 100 years of oppressive injustice


THIS year marks the 100th anniversary of the Ganja Law of 1913. This law was rooted in fear and also in a tradition of law-making that discriminated against lower class black people. It is a racist law that epitomises the oppressive injustice of slavery and the colonial/planter system. This racist law was the idea of the Council of Evangelical Churches in Jamaica. The Law gave the police special powers which members of the force used, in a brutal and repressive manner, against the people in general and the Rastafarians in particular. The Ganja Law of 1913 must be abolished and replaced by a new regime. The earliest debates on ganja were informed by elite white perception and anecdotal evidence. They lacked the philosophical, logical and scientific perspectives.

The history of ganja and the Jamaican society is interesting and instructive. It is interesting because of the major characters and setting associated with the Law of 1913 and its subsequent amendments. It is instructive because it illustrates the brutal nature of law-making process in post-slavery society, and its oppressive application against the masses, lower class black people. The emergence of the campaign and preparation of this oppressive instrument, the 1913 Law and its Amendment in the 1920's, was led by the Church and white elites. During the 1930's and 1940s the newspaper in combination with elite perception, the police and the Resident Magistrate were the major characters in the amendments in that period. In the pre-and post- Independence period the government through the Ministries of Home Affairs and later the Minister of Health led the ganja debate of the 1960s and 1970s. Today it is the Minister of Justice who plays the lead role for the government in the current ganja debate. The planter-controlled society meted out severe punishment to black labourers in the form of extremely high fines for penalties from court cases in the post-emancipation period. The fine for ganja, "a victimless crime", was exorbitant for people who had little or no money. When the fines were not effective as deterrent, they were combined with mandatory imprisonment. It was this law that introduced "mandatory imprisonment" in the jurisprudence landscape of Jamaica. This measure did not curb the use of ganja.

At the end of the 19th century into the early 20th century, the church in Jamaica saw its power declining. There were the emergence of the revivalist movements and also an increasing of vices — use of opium, ganja and alcohol. It felt that it had the moral obligation to curb, if not destroy these vices. Many newspaper reports have illustrated the issues of the church regarding ganja smoking among the "natives"; and also its association of ganja to insanity. In 1912 there was an Opium Convention at The Hague. There were also increasing concerns in Jamaica on ganja smoking among the "natives". According to one study, the Council of Evangelical Churches prepared the Law and sent it to the Legislative Council in 1912. It was not acted upon. In the same period the newspaper published that out of 283 people admitted admitted to using ganja. About the same period there was another article on the "Dangers of ganja smoking among the natives of this colony" illustrating the dangers of ganja smoking now that there is increasing evidence of ganja smoking among black people. The white elites associated violence with ganja smoking; and since they perceive black people as 'brutes' they developed narratives of the 'evils of ganja smoking' among lower class blacks. During the colonial/planter rule racism was the order of the day; and high fines as oppressive penalties were meted out against lower class black people for the simplest of crimes. The matter of race emerged again in the mid-1960s was raised by government Senator Ronald Irvine in the ganja debate with Opposition Senator Ken McNeil.

The Ganja Law of 1913 was employed against the "cultivation and importation" of ganja, punishable by a fine of one hundred pounds or up to 12 months imprisonment. The same Council of Evangelical Movement observed that the Law of 1913 was "practically useless". According to reports the Church called for amendments for smoking selling and entering premises upon which ganja is grown by the police. There was no regard for the rights of man on how he used his private property. This reflection on the second amendment took at the time of the 1924 UN Opium conference in Geneva. The 1924 Amendment, inspired by the Church called for drastic increased of fines and imprisonment on first conviction. It was renamed "Dangerous Drug Law of 1924". The 1930 and 1940's was marked with the rise of the early Rastafari movement and the role of lower class black people resisting oppression. The leading newspaper and the white elites began a national campaign against ganja against their fears about the plant. The police and the Resident Magistrates of the parishes were the leading characters in the amendment of the 1924 Law. There was concern that ganja smoking may have been associated with the uprisings among the masses in 1938. The 1937 Marijuana Tax Act may have provided propaganda during the period.

The 1940s amendment was, in part, a response to the emergence of Leonard P. Howell and the early Rastafari movement. The development of the Ganja amendments in the 1960's was also associated with radical activism by Rasta and also violence associated with the Henry back-to-Africa movement. It was the period of the "Coral Gardens Affairs" that the amendments of the 1960s took place. New developments in Jamaican politics in the 1970s and influence from scientific developments about ganja smoking, smashed the anecdotal allegations of the past. This led to profound change of the ganja law in the 1970s by removing the list of criminal activities associated with the law and its mandatory imprisonment characteristic. A study of Ganja Smoking in Jamaica completed by Rubin and Comitas in 1972 may have also had influence on the ganja debates of the 1970s. Changes in the USA during the 1990s and 2000s, have influenced levels of ganja lobbying in Jamaica that led to the Chevannes Commission in 2000 and the current initiative led by the Minister of Justice, Minister Mark Golding, respectively. The time has come for a new regime for ganja, similar to the license and regulation of alcohol. According to Fraser (1974) in his study on the ganja laws in the region, the eradication of ganja is impossible and the time has come for a new legal regime.

Louis EA Moyston

December 02, 2013

Jamaica Observer