The Parliament is being called upon by the minister of finance to rubberstamp an agreement, which no one knows the real story behind its creation. The matter relates to the proposed amendment to the Income Tax Act.
Last week a bill was tabled in the House of Representatives which proposes to grant income-tax reprieve to employees of international businesses that establish group headquarters in Jamaica.
Dr Peter Phillips, the minister of finance, said the bill was brought to Parliament to honour a commitment given by the previous government.
"There were commitments given against which some companies acted to establish group headquarters in Jamaica," Phillips said during the weekly Jamaica House press briefing.
"It is hoped that by facilitating the establishment of group head office companies in Jamaica, other companies will realise the economic benefits, including increased foreign investments, access of alternative capital providers, new markets and the creation of new jobs," read the memorandum of objects and reasons.
Under the proposed law, companies must apply to the minister of finance for a certificate which designates it as a group head office.
The bill proposes, among other things, that the tax exemption cannot be given unless the entity proposes to employ, or already employs at least 30 per cent of its employees from among citizens of Jamaica who are resident in Jamaica.
Phillips said the Government was "committed to the idea that the word of the Government of Jamaica ought to be a secure word".
While we understand very well what Phillips is saying, we are most peeved that the country is being told about commitments for tax waivers after a parliamentary committee has considered and agreed on a menu of tax reform proposals.
The failure of the former minister Audley Shaw and current minister Phillips to make public the intention to make such an amendment is like putting a blindfold on the people of this country.
In particular, we are most disappointed that discussions were held on the issue of tax reform, yet at no point was it ever communicated to stakeholders that such an amendment was in the works. And by not disclosing the intent to grant this tax reprieve for the setting up of group head offices in Jamaica, both administrations are guilty of deception.
But there's no use now whining about the bill being tabled. Instead, we hope the Parliament gets answers. The Gavel is craving the indulgence of members of parliament as we seek to get the real reason an amendment to the Income Tax Act is being proposed.
The Parliament must not allow itself to be used as a rubberstamp by the Executive. It should resist the temptation of merely passing the bill because the Government had given its word to investors that it would be granting such exemptions.
They must seek to find out the following:
We note that Phillips was unable to indicate the extent to which such massive tax relief could have on the economy. We have no idea if the bill, if passed into law, will be a net gain or net loss for the economy.
This newspaper reported that telecommunications company Digicel, which is now building its group headquarters in downtown Kingston, refused to disclose whether it received commitments from the Government for the establishment of its group headquarters in Jamaica, and whether those commitments have been fulfilled.
The company, however, said: "We welcome any initiative that encourages further foreign-direct investment into Jamaica."
The company added: "We expect that Digicel will be entitled to avail of the measures contained therein, as will any other company that meets the criteria set out in the legislation that has been tabled."
Time will tell whether this bill should properly be called the Income Tax (Digicel Amendment) Act 2012.
The Gavel is by no way suggesting that the Government does not have a responsibility to woo investors to the country. However, this cannot be at the expense of transparency. At the very least, it is baffling how a government, which has announced a freeze on waivers, just breaches its own rules by promising such a reprieve.
One wonders if it would have given similar waivers to local companies which move to remote areas of parishes such as St Thomas and Trelawny to set up shop.
The answer: No, it would not because it would be seen as injurious to the tax reform package. Or put another way, there is one rule for the Medes and another of the Persians. We hope to be proven wrong. MPs, please, the country deserves a robust debate on this one.