KINGSTON, Jamaica, CMC – Jamaica’s opposition People National Party (PNP) responding to the seemingly popular budget tabled by Minister of Finance Dr Nigel Clarke earlier this week, says not everyone will benefit from the government’s move to give back J$14 billion in taxes.
In delivering the 2019-20 national budget Minister Clarke said that the government would scrap the minimum business tax, replace stamp duties with a flat J$5,000 fee, reduce the transfer tax, raise the general consumption tax threshold and get rid of the asset tax for non-financial institutions.
But the move is being criticized by the PNP’s spokesman on finance, Mark Golding, who is questioning the choices made by the government in deciding where to give the tax breaks.
Not helping “typical man in the street”
He says ordinary Jamaicans will not be among those benefiting from the initiative.
“The choices as to how the J$14 billion of taxes that are being given away – there is really nothing in there for the typical man on the street.
“For the little small person who is struggling to survive – they are not benefitting from transfer taxes or stamp duty. So, given the pressure the people are under, you could have given some of that
Tax revenues growing
14- billion to those people,” Golding said, noting that the government will be able to forego the billions it’s giving up because tax revenues have been strong under the current economic program.
“In a sense the IMF (International Monetary Fund) has allowed them to reduce the taxes by giving them a softer primary surplus target – the revenue performance has improved, largely because of the work we did while we were in office. That has borne fruit to really pay for a lot of these things…,”Golding said.
But Clarke has defended the government’s new policy, telling reporters Friday that the present administration was very strategic in deciding on the multi- billion-dollar tax cut.
Strategic tax relief
“We are not out of the woods. At 96 per cent of debt to GDP (gross domestic product), that leaves us still very vulnerable and so we have to be very strategic in the range of taxes that we choose to reduce; and strategically, we have chosen to make adjustments to distortionary taxes, (these are) taxes that distort business activity, investment activity and economic activity and distort activity across a range of sectors and for everybody.
“ What we addressed were things that needed to be addressed a long, long, long time ago, the things that inhibit the growth that we want,” he said.
Clarke said that with respect to the reductions in taxation, “This benefits everyone who has something to do – from the person who accesses micro credit, who are paying high fees, if they want to refinance those micro credit loans and there’s a bill of sale over equipment that they have.
“Right now there is an inhibition or a barrier to do so because of the transaction cost that they have to pay to the government of Jamaica. With the reforms that we are implementing, that will not exist anymore. The ability to phase out financial institutions who are not serving you well is enhanced because these transaction taxes go away,” he said, insisting that the government will ensure that all Jamaicans benefit from the abolition of certain taxes, such as the minimum business tax, and the raising of the GCT threshold.
Budget hailed by PSOJ
Meanwhile, the Private Sector Organization of Jamaica (PSOJ) Friday welcomed the “pragmatic and business friendly” budget presented to the Parliament on Thursday by Finance Minister Dr. Nigel Clarke Minister.
“His competent and confident elucidation of the Government’s intention for its financial management in the year to come has initiated a resurgence of confidence within the business and investor sector and signifies a new and optimistic future for the country’s fiscal management,” PSOJ said in a statement