Technocrats explain tax rates for earners above $6m a year
Damion Mitchell, Editor – Radio & Online
Technocrats in the Finance Ministry have sought to clarify the income tax rates that will apply to people earning above $6 million a year.
In opening the Budget Debate on May 17, Finance Minister Audley Shaw said people getting more than $6 million a year will be taxed at a higher rate of 30 per cent instead of the 25 per cent applied to lower salaries.
However, Aayon Cruikshank, the acting director of trade in the Finance Ministry, says only the portion of earnings above $6 million will be taxed at 30 per cent.
So for example, someone earning $9 million a year would pay two tax rates – 25 per cent and 30 per cent, Cruickshank said in a Jamaica Information Service-produced post-Budget discussion programme.
He said the employee earning $9 million a year would benefit from the impending tax free portion of $1 million, and would be taxed at 25 per cent on the earning between the threshold and $6 million.
However, the employee would be charged at a rate of 30 per cent on the remaining $3 million.
Earlier today, the Private Sector Organisation of Jamaica (PSOJ) issued a release saying the tax package unfairly places a greater burden on approximately 12,000 already compliant Pay As You Earn (PAYE) workers.
"This measure is a retrograde step which takes us back to before the 1980’s tax reform and which was not effective when tried by the last administration," said a PSOJ spokesperson in the release.
The PSOJ the tax measure will result in tax avoidance measures which will be a distraction to Jamaica’s fiscal programme.
"The PSOJ suggests that this burden is reconsidered," the organisation’s spokesperson said.
IN PHOTO: Shauna Trowers
In the meantime, Shauna Trowers, director of taxation policy in the Finance Ministry says the income tax rates will apply to employees who pay PAYE as well as self employed people who are required to pay income taxes.