Sabrina Gordon, Staff Reporter
FINANCE MINISTER Audley Shaw yesterday tabled a Green Paper in the House of Representatives which proposes, among other things, a reduction in the rate of the general consumption tax (GCT).
It is proposed that the standard GCT rate of 17.5 per cent be reduced to 12.5 per cent starting January 2012.
The potential revenue loss from this measure is calculated at approximately $16.2 billion.
The Green Paper also proposes that the five per cent advanced GCT now charged on the importation of goods be abolished, and replaced by an advance five per cent on the cost insurance and freight fee paid by commercial importers, except for bauxite and petroleum.
It is also proposed that the statutory corporate income tax of 331/3 per cent that now applies be reduced to 30 per cent by January 1, 2012, and to a further 25 per cent by 2013 in line with what is now charged for personal income tax.
At the same time, the Green Paper proposes that the personal income-tax threshold, which now stands at $441,168 per annum, be increased starting January 2012 through to 2014.
The Green Paper suggests the threshold be increased incrementally to $507,312, $600,288 and then to $624,000 by January 2014, and is likely to result in approximately 101,512 persons having to pay no income tax. The move could lead to a revenue loss of $16 billion.
tax reform critical
The paper also further suggests an amalgamation of the education tax with personal income tax, and while not specifying, an elimination of one of the payroll taxes.
Tax reform has been a critical part of the Government's mandate for decades, with several reports - including the 2004 Matalon Tax Policy Review from which some of these reforms emanate - being prepared and tabled in Parliament.
Among the other reforms suggested in the paper tabled are the compulsory filing of income-tax returns, simplification of major tax laws and regimes to include the creation of an Omnibus Tax code and a Tax Incentive and Charities Act.
Also included is the implementation of a minimum business tax to ensure each business pays while eliminating all the little trade licences.
Already other reforms, such as the removal of stamp duty and transfer tax on corporate bonds, as well as a flat $5,000 charge for stamp duty on probate and letters of administration, are slated to take effect this month.