Shaw defends tax plan
Insisting that the newly unveiled revenue measures will only be beneficial to the country, Minister of Finance and Public Service Audley Shaw said that not only was it putting back funds into the hands of the poor working class, but the earning measures would have a negligible impact on inflation by only 0.2 per cent.
"I have heard certain comments, some from the Opposition, crying out loud about the potential inflationary impact of the tax package, and I just wanted to say that in the course of putting the package together, we consulted with the appropriate authorities, and it was agreed that the tax package is nominally expected to impact inflation in almost a negligible figure at just about 0.2 per cent. That is quite negligible in the context of the inflation rate," he said.
On Thursday, during the opening of the Budget Debate in Parliament, Shaw outlined the revenue measures for the fiscal year 2016-17. The highlights of which were new taxes to be applied to fuel, cigarettes and departure tax, while increasing the annual income tax threshold from $592,800 to $1 million on July 1, 2016 and $1.5 million on April 1, 2017. This will affect 251,792 Pay As You Earn (PAYE) workers, in addition to self-employed persons who file tax returns.
EVERYONE WILL BENEFIT
However, following the announcement, there have been widespread outcries from various quarters, adamant that the plan was tantamount to "giving with one hand and taking back with five".
"I know that a lot of persons are saying that those who are below the income tax threshold will not benefit, and that they are likely to suffer because of the tax package, but let me say that the kind of taxes that we have imposed here are not taxes that are likely to directly affect that category in the sense that these are not GCT (general consumption tax) that affects purchases of basic foods and things like that," the minister said, speaking yesterday at a post-Budget press conference at his Heroes Circle offices in Kingston.
"[With] $12.5 billion in this first year, $14.1 billion next year, totalling $26.6 billion over these two fiscal years, [money] is being put back into the hands of hard-working Jamaicans, whether in the public service or private sector. Many of them [have been] described as the working poor because their income has been devastated and their purchasing power [has been] devastated by the continuous devaluation of the Jamaica dollar. These funds are being put back into the hands of people and everyone is ultimately going to benefit."
Shaw also said that contrary to popular belief, the new taxes would not affect the cost of electricity.
FUEL TAX DOESN'T APPLY TO JPS
"The argument also is that JPS (Jamaica Public Service) light bills will go up as a result. I want to remind everyone that this tax (on fuel) does not apply to Jamaica Public Service at all. It is only related to SCT (special consumption tax) for fuel for road transport only," he said.
The minister said while the Government was intent on moving the country "from poverty to prosperity", it had to be fiscally responsible in doing so. He said that what the Government did was unprecedented by almost tripling the income tax threshold, however, the money had to come from somewhere to finance it.
"We can't be irresponsible and take away revenue and don't replace it with something. That would be fiscally irresponsible," Shaw stated.
Noting that there was $50 billion in tax arrears because of non-compliance, he also said the Government would be ramping up measures to ensure greater compliance.