Tax reforms can benefit small businesses - review committee
published: Sunday | March 13, 2005

Ashford W. Meikle, Staff Reporter

Chief executive officer of the ICD group, Joseph M. Matalon says that the recommendations of the Tax Policy Review Committee can benefit small businesses by stimulating growth of the sector.

He was speaking at a breakfast discussion organised by Pan Caribbean Financial Services last Wednesday at the Terra Nova All-Suite Hotel. The breakfast discussion focused on the recommendations of the tax reform committee which Mr. Matalon chaired.

In an interview with Sunday Business, Mr. Matalon said: "What we are trying to do is to [simplify taxation] issues that relate to the competitiveness of the Jamaican economy. If, for example, the PAYE is simplified as we suggest, the cost of compliance would be significantly reduced."

As it relates to the current pay as you earn system the committee has recommended that:

Increase personal income tax threshold to $275,000, adjusting for inflation each year.

Harmonisation of the corporate and personal income tax rates at 25 per cent.

Elimination of the HEART and education taxes: "We think it's high time they are abolished. They are taxes disguised as statutory deductions. They are regressive."

Merging of the administration of the National Housing Trust and National Insurance Scheme.

Mr. Matalon said, "A harmonisation of the personal and corporate taxes would remove the disadvantage to a small businessman of incorporation. As businesses grow, it is now longer possible to operate as a sole proprietor, but faced with an eight per cent increase in taxation [and] on capital gains, he opts not to incorporate the business."

He emphasised that simplifying the PAYE would mean: "The cost of compliance is significantly reduced. It means the reduction of the gross cost of employment to companies and would encourage additional employment. It would also increase the net take home pay which would encourage more people on the margin to get into employment."