Thu | Sep 21, 2017

Tax break at any cost, Mr Shaw?

Published:Wednesday | April 13, 2016 | 4:00 AM

In light of the current controversy surrounding the Jamaica Labour Party's (JLP) promised abolition of income tax for PAYE workers/employees earning up to $1.5m per annum and surrounding issues, I would like to express my concern about the approach of the JLP administration towards implementing the proposal.

There seems to be some amount of deception on the part of both incoming/outgoing administrations on the issue regarding the availability of financial resources to implement the plan.

I am taken aback by the new Government's admission that it was banking on using funds that were raised from taxes designated to serve as an insurance against future shocks in oil prices to help pay for its election promise, and equally disappointed in the fact that the then People's National Party (PNP) Government had already (mis)used the funds collected from motorists, under one pretext for another purpose (with this specially earmarked fund having being channelled into the Consolidated Fund for regular housekeeping expenses and debt servicing).

 

TRUST ISSUES

 

I am particularly alarmed by the revelation by the former finance minister, Peter Phillips, that the current office holder, Audley Shaw (then the opposition spokesman on the said portfolio), had prior knowledge that those particular funds, on which he and his administration claimed they were banking, were NOT available.

The actions of both were deceptive and struck at the heart of trust, integrity and accountability.

We in the National Democratic Movement (NDM) are deeply concerned that in its anxiety to fulfil its election promise, the current Government may impose additional hardship on the Jamaican people by raiding funds earmarked for other purposes (for example, we have heard of threats to raid the Tourism Enhancement Fund (TEF) and the PetroCaribe Fund) or the imposition of new taxes. They must be cognisant of the fact that it may not be convenient to implement the tax benefit in the time frame and manner in which they had promised.

No doubt, the overdue local government elections are at the forefront of the JLP Government's mind, and it would like to make the people happy. However, political expediency should not be allowed to take priority over the long-term good of our fragile economy and the well-being of our nation.

As the political organisation which originally proposed the abolition of personal income tax (PAYE) nearly 20 years ago, the NDM is concerned about the Government's approach to this important policy.

 

PHASE OUT PAYE

 

We are calling on the Government to consider the original proposal presented by the NDM nearly 20 years ago. Under the NDM's plan, PAYE could be phased out over a five-year period, with the Government giving up five per cent each year until the current 25 per cent income tax is reduced to zero per cent - for all levels of income earners, not just some.

Jamaica did well over many decades with PAYE and without general consumption tax (GCT). The GCT was brought into being to replace PAYE. However, the then PNP Government, which implemented it in the early 1990s, kept both taxes in place, imposing untold burden upon the backs of taxpayers and reducing their spending power, forcing people to live from hand to mouth and stagnating our economy.

Then to add insult to injury, the constant devaluation of our currency over the years has further pushed more people below the poverty line.

The abolition of PAYE would serve as a stimulus to our weak economy and finally give our people a break, but it must be done correctly.

- Peter Townsend is president of the National Democratic Movement. Email feedback to columns@gleanerjm.com and ndmjamaica@yahoo.com.