Fri | Aug 18, 2017

Tax relief phased in too quickly

Published:Monday | May 16, 2016 | 5:00 AM

THE EDITOR, Sir:

Whereas I applaud the new Government for its determination to fulfil its ambitious pre-election promise of income tax relief, I question the soundness of its decision to implement it at all cost, in one or two phases, when it could have been implemented in five phases.

If the Government has to impose new burdensome taxes upon the people in order to fund its election promise to abolish income taxes overnight, the road ahead may be paved with more hardship for the people of Jamaica. By tinkering with the flat-rate tax structure in order to impose a higher rate of income tax upon one class of employees, I believe the Holness administration is complicating the system unnecessarily.

If it has to impose new taxes on crude oil and LNG, which will result in increased electricity rates, transportation costs and more, isn't it giving a benefit with one hand and taking back even more with the other hand?

And what of the potential risk of high inflation, fuelled by the sudden infusion of more money chasing too few goods, leading to more imported goods, and stress on the badly weakening local dollar?

The National Democratic Movement has for a long time been advocating for the abolition of personal income tax, but for it to be implemented in a responsible and practical way, phased in over a five-year period, with the Government giving up five per cent each year until the tax is reduced to zero.

This method would not create the massive hole in the Budget and hence would not necessitate new taxes being imposed, nor would it fuel inflation. It would give the Government adequate fiscal space to make it happen smoothly and lead to gradually increased revenues through consumption taxes.

PETER TOWNSEND

President, NDM

ndmjamaica@yahoo.com