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Unions wary of proposed new measures to fund income tax break

Published:Thursday | December 22, 2016 | 12:43 AM
Davis Whyte

The about turn by Finance Minister Audley Shaw on the proposed imposition of new indirect taxes to fund the Government’s income tax break - the second part of an election promise to be fulfilled in April 2017 - is causing unease among some trade unions who have expressed concern about the administration’s plans.

Shaw had initially asserted that the Government would not introduce new taxes to fund the tax plan.

President of the Jamaica Confederation of Trade Unions (JCTU) Helene Davis Whyte said the unions had cautioned the Government at the outset, pointing out that the income tax break could not be implemented without imposing taxes on the same persons who would have benefited from the tax measure.

Davis Whyte told The Gleaner that the Confederation was concerned, particularly for workers at the lower level of the wage scale, many of whom would not have benefited from the income tax break because they were already below the tax threshold at the time.

“We are concerned and we are waiting with bated breath to see how and what will be taxed, but from our indications based on what we had looked at, at the time, certainly for the next budget cycle, the Government has to find a way of funding not only the $16 billion that it would take to implement the remainder (of the tax break) but would also have to be seeking ways of shoring up the amount that they have indicated that they will not be taking from the NHT,” the JCTU president noted.

“We are really looking at almost $30 billion that they would have to find a way of funding. It is a huge gap,” she added.

In 2013, the then Portia Simpson Miller administration had dipped into the coffers of the National Housing Trust (NHT) and extracted $11 billion over a four-year period for budgetary support. The then Opposition castigated the Government, claiming that the move was a “scandalous raid” on the trust fund.

Davis Whyte recalled that the current administration had declared that it had no intention of raiding the NHT to fund any budgetary requirements.

“It means that they will have to fund it (budget) from another source - $30 billion in taxes is a huge sum and I am not sure what tax, and where that could apply to, so we are very concerned as to the make up of the 2017-2018 budget,” she reasoned.

While suggesting that the multilaterals preferred indirect taxes because it is easier to collect, Davis Whyte said the JCTU is of the view that instead of going “the easy route”, the Government needs to consider taxing those who can afford to pay the taxes.

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President of the Jamaica Teachers' Association, Howard Isaacs, said the union would not want to have any tax increases that would be to the detriment of its membership, noting that the workers are already challenged by “what is happening in the economy”.

“Any increase in taxes is something that we would be concerned about but it is a matter that would be discussed among the membership of the unions,” he said.

Political analyst Dr Paul Ashley has no issue with a shift from direct to indirect taxes but contends that it depends on the goods on which the indirect tax is imposed.

He told The Gleaner that the only items that the Government could target at this time for indirect taxes are luxury goods such as high end motor vehicles.

“If he (finance minister) imposes it on luxury motor vehicles… I see some Mercedes Benz that people talking about starting at $13 million and when you put on the package it reaches $20 million,” he said.

“I would expect that luxury goods that already have SCT should attract more,” he said.