Lascelles Chin urges retreat on junior market tax waiver
Published:Friday | February 17, 2012 | 12:00 AM
Lasco Group chairman Lascelles Chin urged the Government to reject considerations to remove junior market tax waivers, at an investment forum on Thursday.
The tax benefits amounting to 10 years of waivers is a primary appeal of the market, which grew at one of the fastest rates in the world last year and represents some J$23 billion of wealth.
"That junior market is very important," said Chin, directing his comments to forum presenter Industry Minister Anthony Hylton.
Chin argued that listing his group of companies last year allowed him to embark on a multibillion-dollar factory expansion.
"A lot of people in the private sector and Government have been pushing for the closure of the junior market. I have to tell you, sir, if it was not for the junior market I could not have found the funds to make this investment," Chin said.
Hylton responded that a review of the market will be done as its original intent may have been thwarted.
"We take the point which really is a call for lower taxation, but that has to be in the context of the overall mission for the Government and for Jamaica as a whole," said Hylton, who appeared as a presenter at the Mayberry Investors Forum to speak on foreign direct investment.
"In this go around we will ensure that we don't create something, say that this is the objective, and don't properly evaluate and review it. All of that has to be done," he said.
Market fears arose late last year from the circulation of the Private Sector Organisation of Jamaica's (PSOJ) draft tax-reform proposal to stakeholders which takes a position against tax breaks.
The PSOJ is coordinating discussions with various groups whose positions are now said to have been formulated into one document for presentation to Government's Parliamentary Tax Reform Committee. The Green Paper on tax reform, tabled in May last year, aims to simplify the tax structure while expanding the tax base.
Strike a balance
"Given the fiscal situation, we have to strike a balance, otherwise the Government will not be able to do some of the things it must do," said Hilton in response to Chin. "So there must be a balance, and I suggest that the approach that we will take will be based on evidence and data. Because so much policy is made on the notion that if we do this-that will result. But we don't measure it, evaluate it, review or adjust it."
Mayberry CEO Gary Peart countered that the burden of evidence ought to rest heavier on the opponents of the junior market.
"For the record, minister, as it pertains to the junior market there is empirical data. If it ain't broke don't fix it," said Peart. "The recommendation (for review) is what needs empirical data. Our position is if it ain't broke don't fix it."
The junior market aims to raise a maximum of $500 million for medium-size companies. The incentives include a full income-tax break for the first five years of listing and a reduced tax rate until the 10th year of listing equivalent to one-quarter the regular tax rate.
The junior market, launched in April 2009, received its first listing in October of that year with Access Financial Limited. Currently, 12 stocks are listed on that market.
In December, the Jamaica Hotel and Tourist Association and the Jamaica Stock Exchange (JSE) separately objected to the PSOJ proposal. The JSE said removing the tax waiver could halt new listings and lead to a lacklustre market performance in 2012.