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IMF and Jamaica exploring carbon, environment tax

Published:Monday | June 27, 2016 | 6:39 AM

New documents from the International Monetary Fund (IMF) have revealed that the Jamaican government is exploring the imposition of environmental and carbon taxes as fresh ways to earn revenue given the resistance to changes from direct to indirect taxation. 

A carbon tax is effectively a cess on carbon dioxide emissions produced during the burning fossil fuels.

The charge, called a carbon price, is the amount that must be paid for the right to emit one tonne of carbon dioxide into the atmosphere.

Experts, including the IMF agree, that the new tax package announced by Finance Minister Audley Shaw in May represents a shift from direct to indirect taxation. 

But the IMF admits that uncertainty regarding the revenues from the ongoing personal income tax reforms and accompanying revenue offsets, risks Jamaica's fiscal position. 

The Funds says with its support, the Jamaican government is exploring revenue options for the upcoming 2017/2018 fiscal year to continue the rebalancing towards indirect taxation. 

According to the IMF, the exploration involves the scope for environmental and carbon taxes.

Meanwhile, the IMF is maintaining that as the balance further shifts toward indirect taxation, it will be essential for the government to strengthen conditional cash transfers to reduce the impact on the poor.