NHT 'raid'? - Gov't considering funds for budgetary support
The Government is reportedly considering using National Housing Trust (NHT) funds for budgetary support, and Dennis Chung, chief executive officer, Private Sector Organisation of Jamaica (PSOJ), said doing that would reduce taxes to be imposed for the upcoming fiscal year.
In 2013, the Portia Simpson Miller administration amended the law to take $45.6 billion from NHT over four years for fiscal support under a four-year deal with the International Monetary Fund (IMF). That deal was replaced last year with a three-year standby one.
Andrew Holness, while opposition leader, criticised the decision, and his Jamaica Labour Party threatened court action to test its legality. He also said alternative funding could have been found.
Now he is prime minister and his administration is looking for at least $27.4 billion in additional revenue for the next fiscal year. That amount includes $16 billion for Phase Two of the income tax giveback and $11.4 billion to replace the NHT's support. Additional money will also be needed for wages and salaries.
Chung said the Government should do what is "practical" and continue with the NHT to reduce the amount to come through taxes.
"It's going to be difficult to hit the economy with so much more taxes. We can't have a situation in the next tax year where we're increasing the overall taxes on the economy; we're going to be slowing it down. Jamaica is at its taxable limit.
"If we actually increase the tax rate, we could be looking at diminishing returns and certainly hit the lower-income people. If the money is sitting down there, not just at the NHT, how can we utilise those funds?"
On the backlash Holness could face, Chung said, "I understand that, but I can only look at it from practical side. Should we insist that Trump (US president) build a wall because he said he was going to build a wall? Whatever the politicians say in their moments of hysteria, it has nothing to do with the practicality of the situation."
Fayval Williams, state minister in the finance ministry, said she should could not "confirm nor deny anything about the NHT", adding that Audley Shaw, finance minister, would reveal the revenue measures next month.
"We are examining all that we can to see the best Budget that we can put forward," she said.
The Budget for the 2017-2018 financial year will be tabled on Thursday. Shaw is expected to announce an increase in property tax rates in March. Shaw had labelled the last NHT withdrawal a "raid".
I told you so - Phillips
Opposition Spokesman on Finance Dr Peter Phillips said the cash crunch facing the Holness administration was part of its own doing.
"As we had said long ago, and we have continued to say, the country, and especially the poorest people and the ordinary working people, have been called upon to bear too much of a burden because of the reckless, politically motivated promises of the administration in the run-up to the elections."
But he feels the NHT could withstand any withdrawal. "I can't see any reasons why the NHT would not be able to continue, indeed to accelerate, the housing programme with the resources that would be available to it over and above any drawdown," he added.
The NHT is projected to have about $249 billion in liabilities and accumulated fund by the end of this fiscal year, according to finance ministry documents. That includes $134 billion in surplus on income and expenditure.
Hugh Johnson, president of the Small Business Association of Jamaica, said the Government should "leave NHT money alone" and "allow NHT to help small businesses".
A court in 2016 said the NHT was never intended to operate as a private scheme, in dismissing a legal challenge against the 2013 withdrawal.