Sabrina Gordon, Business Reporter
Jamaica's banks and investment firms are pushing for a reduction in the asset tax rate proposed in May to raise J$1.95 billion of new revenue for the Govern-ment this fiscal year.
The tax, to be applied at a rate of 0.2 per cent, took effect in June, but financial houses will cut their cheques to the Government during the filing of their annual returns, which are due next March.
"The Government had said they wanted to raise a certain amount of revenue. When we calculate the numbers using the percentage that they have used, we are getting a higher number, so we are discussing that with them with, with the hope of getting the percentage reduced to get to that particular revenue figure," said Gary Peart, president of the Jamaica Securities Dealers' Association (JSDA).
"... We are cautiously optimistic that we will get it down," said Peart. He declined comment on the rate being proposed.
However, it would have to be in the region of 0.15 per cent "or maybe a little less" to maintain the revenue target, said a New Kingston analyst who requested anonymity. The rate will be applied to the total asset base, but net of IFRS and prudential loan provisions, the finance ministry said at the announcement of modifications to the tax.
Non-financial institutions will pay nominal rates ranging from J$5,000 to J$100,000 per annum, depending on the size of their assets.
Peart said the financial sector pre-ferred that the asset tax be eliminated, and that the corporate tax rate be increased instead.
This proposal, he said, has been put to the Government.
The corporate rate is set at 33.33 per cent, but companies usually end up paying lower rates because of deductions and tax credits that can be offset against losses.
"From a dealer perspective, we actually prefer to pay an additional amount of corporate tax instead of the asset tax, because when you pay an asset tax, it doesn't matter whether or not we make a profit," said Peart.
"So the dealer association feels that it would be better to pay an increased income tax rate for the specified period of time than to levy an asset tax," he explained.
Peart said the JSDA has written to the Government, but is yet to hear back. The finance ministry did not respond to request for comment up to press time, neither did the Jamaica Bankers' Association.
"The principle of it is that if you have someone who is marginally profitable or losing money, they would still have to pay the tax, so we think the proposal is fair and is the direction we want to go," he said.