TEN PIECES of legislation, which guarantee fiscal incentives to favoured industries in the country, are to be repealed when the Income Tax Act is amended.
Finance Minister Dr Peter Phillips, in a statement to the House of Representatives on Tuesday, said the Jamaican economy has not been well served by the existing regime of sector-based incentives.
"The consensus has been that such incentives may have been partly responsible for Jamaica's lacklustre track record of growth by encouraging misallocation of limited economic resources," Phillips said.
The laws to be amended are the Cement Industry (Encouragement and Control) Act, the Export Industry Encouragement Act, the Foreign Sales Corporation Act, the Hotel (Incentives) Act, the Industrial Incentives (Factory Construction) Act, the International Finance Companies (Income Tax) Relief Act, the Motion Picture Industry (Encouragement) Act, the Petroleum Refining Industry (Encouragement) Act, the Resort Cottages (Incentives) Act, and the Shipping (Incentives) Act.
The laws being repealed currently grant various incentives to cherry-picked industry players.
For example, under the Motion Picture Industry (Encouragement) Act, motion-picture producers are entitled to relief on stamp duty, customs duty, and general consumption tax waiver on the importation of any plant or equipment used in motion-picture production, so long as the articles cannot be manufactured locally.
Phillips told legislators that the Omnibus Incentive Regime, which is a structural benchmark agreed on with the International Monetary Fund, incentivises investment through streamlined and modernised capital allowances that more closely accord with the useful life of assets.
Phillips also said the regime "incentivises the employment of labour through the instrument of employment tax credits".
The bill contains provisions for the introduction of an employment tax credit against income tax payable by companies and individuals carrying on a trade, profession or vocation.
Also, under the new regime, corporate income tax is to be fixed at 25 per cent for all unregulated companies while the income tax for regulated companies is to remain at 33.3 per cent.
The effective date for the fixing of corporate income tax is January 1, 2014, and Phillips said that overtime, "revenues permitting, it is the objective to harmonise tax rates".