TAX FLOP .... measures which replaced bank withdrawal levy underperforming
JAMAICA'S TAX authorities have revealed they have no idea how much revenue is being collected from two measures which were introduced as a replacement to a proposed levy with new revenue measures including the imposition of General Consumption Tax (GCT) on all imported services.
Ainsley Powell, the commissioner general for Tax Administration Jamaica (TAJ) said on Wednesday that there is no clear measure on how much has been collected during the first five months of the fiscal year.
Parliament had approved the imposition of a withholding tax of 15 per cent on all insurance premiums paid by Jamaican residents to non-residents, as well as the introduction of GCT on imported services.
At the time of the Budget Debate in May, Finance Minister Dr Peter Phillips said the measures will yield $2.3 billion. Phillips also said the 15 per cent withholding tax on insurance premiums paid by Jamaican residents to non-residents would enhance tax compliance as well as be in line with interest payments made by resident Jamaican companies, other than banks, to overseas lenders.
But when the Public Administration and Appropriations Committee examined the fiscal performance as was reported in an interim Fiscal Policy Paper laid in Parliament, Powell told committee member Mikhael Phillips that the performance of the new measures has not been measured.
"In terms of the withholding tax on insurance, that has not performed to date as expected. We are still looking at the number to be sure what the performable is, but we are not getting a good result so far with that," Powell said.
Pressed for figures by Phillips, Powell said computations are still taking place in that regard.
As it relates to the GCT on imported services, Powell said "we still have to disaggregate that".
"We have fully rolled out the imported services (tax). It was already in place in law, and we were already collecting from that, so the incremental amount was to deal with the tightening up of the legislation. It was not really intended to be an additional revenue earner in a large amount, as say, the bank tax," Powell said.
In the meantime, the minimum business tax which was implemented in April was $65 million below the $300 million projection for September.
At the end of September, some $532 million has been
collected on the minimum
business tax, way short of the $700 million that was projected.
Powell said the TAJ has been contacting persons who are expected to pay.
Meanwhile, Phillips questioned whether the projections were properly done, considering the level of work that was
carried out to secure the revenue.
"Quite a bit of legislation, quite a bit of incentive schemes would have been implemented, but we are not seeing the positive outruns that we should be seeing from the revenue side. I would expect that even with this business tax that we would have been seeing a greater return on this tax itself," Phillips said.
Tax revenues have fallen behind target by $5.9 billion as at end of August.