The International Monetary Fund (IMF) said a short delay in submitting to the Jamaican Parliament a new law on tax incentives should not postpone its enactment, even as it calls for an effective fiscal rule to lock in the gains from fiscal adjustment so far.
The observation was made by deputy managing director of the IMF and acting chair of the executive board, Nayouki Shinohara following Monday's review and approval of Jamaica's first-quarter performance under the fund's 48-month extended fund facility.
Finance and Planning Minister Dr Peter Phillips was expected to table the Omnibus Tax Incentive Act in Parliament by Monday, September 30, but it has been delayed until October because of concerns raised by local and international stakeholders.
Dr Phillips told Parliament last week that the matter has been raised with the IMF, and it was agreed that more time would be given to work out and enact the legislation.
In a release following the board's review on Monday, the IMF raised no issue about the Jamaica programme with which it had concerns, saying that the completion of the review enables the disbursement of SDR19.97 million or about US$30.6 million.
Shinohara said the programme for the remainder of fiscal year 2013/14 focuses on structural reforms to strengthen the fiscal framework.
"Priorities include the enactment of an effective fiscal rule to lock in the gains from the fiscal adjustment, thus far, and a comprehensive tax reform to broaden the tax base and reduce distortions. An expected short delay in submission to Parliament of a new law on tax incentives should not postpone its enactment," he added.
Shinohara said that "achieving broad-based growth and enhancing social protection are central pillars of the authorities' economic programme. The growth agenda should be bolstered by further actions to enhance the business environment and support well-targeted public investments, in close collaboration with development partners."
The IMF agreement requires that the Jamaican Government no longer consider new applications under existing tax incentive regimes, and after December 31, 2013 new applicants will only be considered under the omnibus regime, and will need to meet the associated new criteria.
The act will eliminate ministerial discretionary powers to grant or validate any tax relief, and put in place a transparent regime for limited tax incentives. Any new tax incentives, based on the new act, will be implemented administratively, without any ministerial discretion in its validation.