Jamaican government screwing savers

The Government of Jamaica is screwing savers and making real estate and stock market investors rich, the exact opposite of what the PNP government did in the 1990s managed by Dr. Omar Davies.
Davies who managed the finance portfolio for the government led by his party, created a paradise for the moneyed class, by having a prolonged period of excessive high interest rates that slaughtered the private sector and killed off many viable financial institutions. Jamaicans to this day continue to suffer for the ill-advised and protracted policy.
The JLP led government has moved in the direct opposite direction, by severely hurting savers. People with money are getting paltry returns by putting funds in banks and not much more if they get into riskier bonds, while savvy investors who understand the stock market are making a killing investing their money in stocks. Added to that, many of the savers are pensioners and must pay tax on the interest earned, thus further reducing the return on investment. At the same time, government sells shares in Wigton Windfarm to a select group of more than 31,000 Jamaicans who are likely to benefit in two ways from the current policy.

Stock market investors making a killing while savers get caned.

The current valuation of local stocks will result in the stock price jumping and handing many a handy profit. The latest move by the central bank in chopping the overnight rate to 0.75 percent is going to increase the valuation of stocks above present levels as investors find the dividend yield of many stocks more attractive than money market instruments.
While the central bank lowers the rate to stimulate the economy, the government has artificially helped in keeping bank lending rates much higher than needed by taxing bank customers with high bank taxes that results in interest rates being around 3 percent points higher than they should. This is where the focus needs to be and not on lowering on savings rate to stimulate the economy. The time for removing the distortion in taxes on banks is long gone. The situation is that banks do not pay the high levels of taxes consumers do, as banks pass on the cost to the end user. Lowering the high bank taxes will do far more to cut lending rates and stimulate the economy than the foolish cutting of the savings rate.

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