Mon | Oct 22, 2018

Firms want better incentive for hiring HEART trainees - Seaga, Thwaites agree tax credit too low

Published:Thursday | August 28, 2014 | 12:00 AM

Daraine Luton, Senior Staff Reporter

In a move to further incentivise the employment of HEART Trust/NTA trainees within the private sector, Education Minister Ronald Thwaites says he will be asking the Cabinet to increase the upper limit of tax credit which employers now get for each person they employ.

At present, employers are able to claim up to $600 per month for a HEART trainer employed in their organisation, but Thwaites said that is not much of an incentive.

"I would like to propose, for example, that the tax credit that employers get for taking on HEART trainee, which has never been adjusted for inflation, should, in fact, be increased considerably," Thwaites told The Gleaner.

Under the HEART Act, an employer who pays emoluments to a trainee for any month is entitled to relief from contributions for that month equivalent to the amount of the emoluments paid up to the prescribed limit.

Important work experience

The minister argued that the increase in the tax credit "would mean that more businesses, small and large, would afford to offer to young people the opportunity for actual work experience, which is such an important add-on to formal training in the classroom".

Employers are entitled to a tax credit of $150 per week for each person employed under the School Leavers' Training Opportunity Programme run by HEART. At the same time, the law requires that employers of persons whose gross taxable monthly emoluments exceed $14,444, pay a sum equivalent to three per cent of the total amount of the monthly emoluments paid to employees.

Thwaites told The Gleaner that he is in discussions with the Private Sector Organisation of Jamaica (PSOJ) and "will, in fact, make a proposal to Government in short order". He said that the discussions are, in part, aimed at quantifying "what it (tax credit) ought to be in order to interest employers in taking on these persons".

Christopher Zacca, president of the PSOJ, told The Gleaner yesterday that the $150 per week was a big incentive back in the 1980s when HEART was formed.

"That allowed a lot of businesses to hire HEART trainees," Zacca told The Gleaner.

He added: "Clearly, $150 per week is no real incentive".

The PSOJ president said that the credit was designed to reduce the cost of training and hiring untrained people. He, however, said that interest has "fallen over the years, because the incentive, now with inflation, is not a significant enough thing and needs to be looked at".

Dropped the ball

Former Prime Minister Edward Seaga, founder of HEART, said it was necessary to increase the tax credit limit otherwise it will be of no incentive to businesses.

"It was conceived in a manner so as to give those persons who responded to the fact that there was a three per cent deduction for purposes of financing HEART, an opportunity to earn back some or all of the contribution that they made by employment of HEART trainees in their own establishments," Seaga noted.

The former Prime Minister said that by not increasing the tax credit limit, somebody has dropped the ball.