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Finance Minister Says Gov’t Plans To Discontinue Taking Funds From NHT
Finance and the Public Service Minister, Hon. Audley Shaw, says the Government plans to discontinue withdrawing funds from the National Housing Trust (NHT) to finance the Budget. Responding to questions at a post-Budget media briefing at the Ministry’s National Heroes Circle offices in Kingston, yesterday (March 13), Mr. Shaw said the drawdown this year is necessary for the phase two implementation of the personal income-tax reform. “It would have been fiscally irresponsible for us to seek to virtually double the tax package in order to cease taking (drawdowns) from the National Housing Trust at this time. But, it is our intention to phase that out,” the Minister said. In opening the 2017/18 Budget Debate on March 9, Mr. Shaw announced a $13.5-billion tax package, $700 million less than the actual cost of $14.2 billion to fund the personal income-tax threshold. He noted that the Government would withdraw $11 billion from the NHT.
Meanwhile, Mr. Shaw said 72,000 Jamaicans earning more than $1.5 million per annum will still pay income tax come April 1 when phase two of the revised threshold comes into effect.
He reminded that 397,083 persons listed on the tax roll will cease to pay personal income tax.
“The goal of the personal income-tax reform was to reduce the burden on those overburdened payers, while at the same time rebalancing the overall tax burden towards consumption or indirect taxation,” the Minister explained.
Mr. Shaw said this goal was achieved during the programme’s phase, as outlined in the 2016/17 budget, “while preserving revenue buoyancy”.
The Minister said this buoyancy is expected to continue during 2017/18, pointing out that “we expect to meet our revenue goals this year, while reducing the tax burden on the economy”.
“In fact, the overall tax to gross domestic product (GDP) ratio is expected to fall this year to 25.4 per cent from the estimated 25.7 per cent in the last fiscal year. So, despite this tax that we announced, taxes as a percentage of GDP will be reduced marginally from the previous year,” he said.
Mr. Shaw said the rebalancing of Jamaica’s tax structure was guided by the International Monetary Fund’s (IMF) assessment that Jamaica, relative to other regional countries, raises above-average taxes from GDP.
He said the assessment further indicated that Jamaica relies more heavily on direct taxes and less heavily on indirect and property taxes.
Additionally, among indirect tax categories, Jamaica’s General Consumption Tax (GCT) “yields a lower share of revenues than the value-added taxes of most upper-middle-income countries,” the Minister said.
“The significant feature underlying our revenue programme has been (the) deliberate strategy of shifting from direct to indirect taxation… and we do it without apology, because we believe it is the right thing to do,” Mr. Shaw emphasised.