Phillips shreds Holness' tax plan
Finance and Planning Minister Dr Peter Phillips has described as inequitable, unworkable, extraordinarily complex and retrograde the cost of a campaign plan of Jamaica Labour Party (JLP) Leader Andrew Holness that he said would drive up government expenses by more than $100 billion.
"The measures that Mr Holness is considering would have an adverse impact on the Budget of a total of $100 billion," said Phillips.
Holness presented the 10-point campaign plan during a broadcast to the nation last week. It was endorsed on the campaign trail by Opposition Spokesman on Finance Audley Shaw.
Phillips, the People's National Party (PNP) campaign director, told journalists during a press briefing yesterday, that he was in absolute agreement with the sentiments expressed by financial analyst Ralston Hyman, in an In Focus column Sunday, that the plan represents "emotional and politically popular undergraduate theorising".
Focusing first on Holness' proposed changes to the personal income tax regime that has generated much discussion in the public space, Phillips said: "Such changes would reintroduce several significant complications that this administration has painstakingly addressed as part of a difficult and complex process of stabilising the economy."
He added: "Such retrograde steps would only serve to introduce untimely distortions and inequities in the tax-payment arrangements."
Phillips noted that the implementation of the proposal would mean that a worker who earns just over $1.5 million would then have an income tax liability of $225,000 more than the person earning $1.5 million.
"In order to address these distortions and inequities, the exemption would have to be applied to all taxpayers," said Phillips.
"This means that the threshold would have to be increased to $1.5 million for every worker."
He noted that the significant changes to the personal income tax regime proposed to make the salaries of 225,000 workers earning $1.5 million and less tax free, would mean "make 72.3 per cent, or almost three-quarters, of all taxpayers in Jamaica exempt from personal income tax".
Added Phillips: "They propose that persons earning between $1.5 million and $5 million will only retain the tax threshold of $600,000."
He said that proposal would mean that fewer than a quarter of the existing taxpayers in Jamaica would bear the burden and continue to pay personal income tax.
Noting that this would cost more than $30 billion, Phillips argued that the effects on the Budget would be catastrophic.