The Faculty of Social Sciences (FSS) at The University of the West Indies, Mona, continues to champion rigorous, policy‑relevant research that addresses Jamaica’s evolving fiscal and economic challenges. In his recent column, Dr. Andre Haughton, economist and lecturer in the Department of Economics, offers a timely and incisive examination of Jamaica’s fiscal response to the devastation caused by Hurricanes Beryl (2024) and Melissa (2025). His analysis underscores the difficult balance between financing recovery and preserving fiscal credibility.
Dr. Haughton highlights that Hurricane Melissa alone inflicted damage estimated at US$8.8 billion, or 41% of GDP, creating financing demands far beyond the reach of Jamaica’s existing fiscal capacity. In response, the Government has tabled new taxes for the first time in nearly a decade, alongside increased borrowing, to sustain reconstruction efforts while maintaining investor confidence.
He explains that measures such as new General Consumption Taxes on digital services, higher excise taxes on alcohol and tobacco, increased environmental levies, and a higher GCT rate for tourism are designed not only to raise revenue but also to signal Jamaica’s continued commitment to fiscal sustainability.
Dr. Haughton cautions that Jamaica’s economy is not expanding fast enough to sustain higher tax burdens. Drawing on the Laffer Curve principle, he notes that beyond a certain point, higher taxes yield diminishing returns as investment slows, informality rises, and compliance weakens. Taxation and borrowing can finance recovery, but they are contractionary measures that cannot alone deliver long‑term prosperity.
The deeper challenge, Dr. Haughton argues, lies in expanding Jamaica’s productive capacity. Fiscal stability has been built on narrow foundations - reduced debt, stronger reserves and disciplined policy but sustainable prosperity requires investment in energy infrastructure, logistics, manufacturing and technological development. Productivity, not taxation, will determine Jamaica’s ability to transform stability into lasting economic strength.
The Faculty of Social Sciences strongly agrees with Dr. Haughton’s analysis. His insights reflect the Faculty’s mission to advance national dialogue on resilience, fiscal sustainability, and economic transformation. We are continuously proud of his contributions as both a scholar and public voice, shaping policy discussions that matter deeply to Jamaica’s future.
Read the full article here: Fiscal turning point: Jamaica’s first tax increase in a decade - Jamaica Observer
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