Phillips wrong on 10-point plan - Holness
Jamaica Labour Party (JLP) Leader Andrew Holness yesterday led an assault on claims by Finance and Planning Minister Dr Peter Phillips that his income-tax proposal would drill a more than $30-billion hole in the Budget.
Backed by Opposition Spokesman on Finance Audley Shaw and Aubyn Hill, head of the party's Economic Council, Holness took aim at Phillips' charge that his plan was "unworkable" and "inequitable".
Flanked by Opposition Spokesman on Facilitation Daryl Vaz and Fayval Williams, another member of the Economic Council, Holness declared that Phillips was way off target in his claims and computations.
He said in a worst-case scenario, the hole in the budget that would be drilled from increasing the pay-as-you-earn (PAYE) tax threshold, would be less than half of the $32 billion being bandied about.
He said much work has been done by the experts on the council.
"We have consulted with the private sector and other groups and taken the working group's figures from 2010 at the base. We have done our own investigations, we have correct figures, so we know that we are correct."
Hill said the $16 million suggested by Holness was the outer band, which was calculated based on current tax collection that included outstanding arrears.
He said when this is shaved, the budget deficit would be far less than $12 billion, which would be offset by economic stimulus that the Holness' 10-point plan would generate.
Declaring that Jamaica is identified as a country with one of the worst income inequality records in the world, Shaw charged that poverty is rampant and increasing.
"I dare say that people with vulnerable earning capacities have been totally ravaged and devastated by a 40 per cent devaluation of the exchange rate over the past four years," said Shaw.
He said the raising of the income tax threshold from the current low of $592,800 to $1.5 million would take place soon after the JLP assumes the reins of government.
Shaw said the PAYE cohort between the salary band of $1.5 million to $5 million will remain at the current threshold of $592,800 PAYE exemption.
Having raised the threshold to $1.5 million, Shaw stressed that everyone who earns $1.5 million or less, will no longer pay PAYE personal income tax.
Shaw said employees who earn a basic salary of $5 million and above will pay the tax on their entire salary.
"The exemption of $592,800 will no longer apply to higher income earners of $5 million or more."
Shaw said the additional taxes to be collected from high-end salary earners would be used as part of the programme of rebalancing that is required to close the hole in the budget.