GCT: ‘greatest cut-worthy tax’
THE EDITOR, Sir:
Minister of Finance and the Public Service Dr Nigel Clarke gave the kind of Budget Debate speech that Jamaicans have been longing for, because it hit all the right marks – substance-, style-, and delivery-wise. It was a giveback, as opposed to the traditional and dreaded ‘tek-weh’ Budget.
The one critical action that I would urge the minister to seriously consider taking, if not this financial year, then, in the 2020/2021 one, is to roll back general consumption tax (GCT) by, at least one percentage point, as was done by the former Simpson Miller administration less than a decade ago.
Doing so would have a positive impact on every facet of Jamaica’s national life. First, such a move would strengthen the purchasing power of Jamaican consumers from all walks of life. Second, when the people have more purchasing power, due to goods being more affordable, then, naturally, more goods will be bought by consumers, which, ultimately, will lead to increased government tax revenues. Third, there is no better economic stimulus that can be initiated by the Government, than to reduce GCT, because GCT is to tax revenues what cocoa is chocolate.
Were that to happen, I predict that for every one percentage point reduction in GCT, ceteris paribus, consumer spending, in relation to normal goods, will increase by 100 percentage points.