No rollback! - Defiant Shaw hails tax package as the best despite strong criticisms
Indicating that there will be no rollback of any aspect of the $13.5-billion tax package, Finance Minister Audley Shaw has said he expects no "battle" between the administration and unions representing public-sector workers which have labelled the package "almost criminal".
Last week, he announced increases in taxes on fuel, alcohol, tobacco products and motor vehicle licences, and related fees. There will also be a new tax on group health insurance, as well as the lowering of the threshold for which a tax on electricity used by residential customers is charged.
"Tax measures are not taken on whim. They are carefully considered by the Cabinet of the country. This is the best decision we can take at this time," Shaw told The Gleaner yesterday, after hosting a post-Budget press conference on his parliamentary announcement last Thursday.
"There's no need for battle with the unions. With the personal income tax reforms - it's not battle. Remember our policy - we don't just take, we give and take."
Shaw used the conference to defend the tax measures, which he insisted represented the shift from direct taxes on items such as income and profits, to indirect taxation on goods and services.
Helene Davis-Whyte, president of the Jamaica Confederation of Trade Unions, which represents 11 unions of more than 50,000 public-sector works, has labelled the tax package "almost criminal", saying it will eat into the disposable income of workers.
Noting that she was "not convinced" of the value of indirect taxation, the union leader said her association's executive will be meeting on Thursday to craft a response as well as update the wage claims due for the 2017-2019 period.
In the meantime, Richard Byles, chief executive officer of Sagicor Group Jamaica Limited, one of the largest providers of health insurance in the country, has argued that the 16.5 per cent general consumption tax (GCT) to be imposed on group health insurance on April 3 will see both employers and employees sharing the cost.
However, Shaw did not buy that argument, and had a word for Byles, whom he had criticised while in opposition as being a "mouthpiece" for the previous administration's economic policies.
"The tax on group health insurance," Shaw said, "goes directly to employers, not employees. As an example, the health insurance cost per employee is about $5,000, at the highest level, per month. So, the tax per employee that we have imposed will be between $700 and $800 per employee, per month. It is unlikely that companies will bother their employees by passing this on to them."
He added: "We do not see the GCT on these policies as a burden on existing companies to reduce the level of insurance for their staff. Neither do we see this as a disincentive for companies who want to provide insurance for their staff."
According to the finance minister, everyone has a responsibility in the push for prosperity.
"I am suggesting to Byles that this is also an opportunity for the companies to see themselves playing their own part in helping to encourage further worker productivity," Shaw charged.
However, speaking on RJR's 'Beyond The Headlines' yesterday, Byles said his calculations of the new group health insurance taxes show an increase of between $1,500 and $2,500 per employee, per month.
"Who can afford it?" the businessman asked, also pointing out that medical inflation, which he said was at 20 per cent last year, was not being factored in the discussions.