Nigel Clarke challenges omnibus tax incentives
Daraine Luton, Senior Staff Reporter
SENATE NEW boy Nigel Clarke last Friday locked horns with government senators Mark Golding and Noel Sloley as he argued that the omnibus tax incentives regime is unlikely to induce investments.
Golding, the country's justice minister, in piloting the legislation through the Upper House, said it represents a major game-change for employment creation and investment.
"We expect this clutch of measures .... will collectively result in a more business-friendly environment for Jamaica and create business investment, productivity and competitiveness, economic growth and employment over the medium to long term," Golding said.
The omnibus tax regime, which under Jamaica's agreement with the International Monetary Fund (IMF) must be in place by year end, will eliminate ministerial discretionary powers to grant or validate any tax relief, and put in place a transparent regime for limited tax incentives.
In addition to repealing several existing incentives laws, the new tax regime reviews stamp and customs duties, while at the same time creates a special framework for income tax relief for large-scale projects and pioneer industries.
Golding noted that the regime allows for generalised incentives for capital and labour.
The incentives, capital and labour, will be complemented by relief on imported inputs which are directly used in production.
But Clarke charged that the depth of reforms required to transform Jamaica into a competitively environment has to go beyond what is contained in the omnibus regime.
"The bill, while it may improve, it certainly does not transform," Clarke said.
He argued that Jamaica lags too far behind on the doing-business index.
Pointing to the ease of paying taxes, Clarke relied on the PwC's recent paying taxes report which shows that it take 368 hours to make 36 tax payments in order to be compliant.
"Reducing the administrative burden on business is the factor that is most positively liked with economic growth to a far more significant degree, in some cases, to cutting of taxes," Clarke.
The opposition senator noted that countries such as Trinidad and Tobago, Costa Rica, Panama and The Bahamas are now the homes of multinational corporations which were once in Jamaica.
"All of these economies are deemed to be more hospitable to business, more suitable to investment and more competitive for production," charged the recently installed opposition senator.
Meanwhile, government senator Sloley said the omnibus regime is too important to be subjected to partisan politics.
Sloley noted that the tourism sector, in particular, stands to benefit from the new regime.
"The comment of administrative cost by Senator Clarke should not be taken lightly. We in business all suffer from bureaucracy and the red tape. This is a step in the right direction," said Sloley.
The Senate passed the omnibus legislation.