Vancouver, British Columbia
Jamaican Prime Minister Edward Seaga must hold an election by April 1989, at the latest. He hopes that gives him enough time to reap the political benefits of tough economic reforms that are only now bearing economic fruit. The many economic adjustments already made have had a ``social and political cost,'' Mr. Seaga conceded in a recent interview here. He argues, however, that improving economic conditions are starting to boost his political prospects.
``People are beginning to realize and feel the benefits of the adjustment,'' he says.
In a public opinion poll last June, Seaga's political party, the Jamaica Labour Party (JLP), lagged 18 percent behind the opposition People's National Party (PNP), led by former Prime Minister Michael Manley. By September the gap had diminished to 12 percent. Today, the polls show a difference of 8 to 10 percent.
If that trend continues, Seaga could be in good shape to do political battle with his longtime political opponent.
In the meantime, he has hired a New York public relations firm, GreyCom International, to arrange interviews with the American and Canadian news media. The publicity drive has two purposes:
One is to update the image of Jamaica in the eyes of the American and Canadian investment community and tourist market. Many still see Jamaica as it was in the late 1970s, torn by political violence and socialistic policies. During the 1980 election, when Seaga first defeated Mr. Manley, more than 750 were killed in street fights. But in local elections last year, largely won by Manley's Labour Party, both parties agreed on a policy of nonviolence. And that was upheld.
A second goal is to boost Seaga's political fortunes at home. The hope is that favorable publicity abroad will be reflected in the media at home. The Jamaica Information Service offices in New York and Ottawa regularly churn out news releases on favorable Jamaican economic developments.
Certainly the Reagan administration and the International Monetary Fund and World Bank largely approve of Seaga's economic reform measures.
One reform was the introduction of a flat-rate personal income tax system at the start of this year.
Previously, the graduated tax system involved a maximum rate of 57.5 percent reached at a level of US$2,000 of income. The reform eliminates all exemptions, allowances, and other frills. An individual taxpayer deducts the first $8,500 (Jamaican; US$1,545) of his or her income. Then he divides the rest by 3 to obtain his tax burden.
Seaga says that with this simplified system, people can calculate their taxes on the back of an envelope. ``It has put a lot of accountants out of business,'' he adds.
Further, some 150,000 of the list of 450,000 taxpayers no longer owe any income taxes. A similar reform was accomplished a year earlier for the corporate income tax, also set at 33 percent. Despite the cut in corporate and personal income taxes, says Seaga, ``Revenues are running way ahead of target.''
The prime minister also lists as accomplishments deregulation of business, reducing the budget deficit from a peak of 19 percent of total national output to 2 percent, trimming inflation from the double-digit area to 7 percent, and the privatization of some government-owned companies. These include the Caribbean Cement Company and about 51 percent of the ownership of the island's largest commercial bank. Most government-owned tourist hotels are also to be divested.
As a result of changed government policies, Seaga says, Jamaica has become more attractive to foreign investors. About 750 new investments have been made in the island since 1981, of which one-third are foreign.
Unemployment, when measured in the same way as in the United States, has dropped from 14 percent in 1980 to 8.9 percent. The economy this year is growing at a 6 percent annual rate, the best in at least 15 years.
Next month, Jamaica will rack up a record number of tourists - more than 1 million. About 3,000 new hotel rooms have been built, making the total 25 percent higher than two years ago.
One indication of the diversification of the island's economy is that the nation's dependence on shipments of bauxite for foreign exchange has fallen from a maximum of 75 percent to 40 percent.
``We are one of the role models in the developing world,'' Seaga boasts.