Tax measures won't affect 'broad mass', says Phillips
Daraine Luton, Staff Reporter
ARGUING THAT the new tax measures he announced last Thursday represent the best option to plug a $6.7-billion hole in the Budget, Finance Minister Dr Peter Phillips said yesterday that those measures are expected to cause the least pain to Jamaicans.
The new tax measures include a withdrawal levy on banks and other financial institutions, which members of the public have branded as a "wicked" and "uncaring" action.
But speaking yesterday during a post-Budget press conference at Jamaica House, Phillips said the measure was unlikely to make PAYE earners worse off unless they withdraw $12.48 million in a year
The new tax, which will be a levy on withdrawals from deposit-taking institutions and security dealers, will be calculated on a graduated rate system, with withdrawals less than $1 million being subjected to a 0.1 per cent tax.
This measure will mean that financial institutions will have to pay $1 in taxes whenever persons withdraw $1,000. When persons withdraw a sum greater than $20 million, the banks will have to pay a 0.05 per cent tax. When there is a withdrawal of more than $5 million, but less than $20 million, there will be a 0.075 per cent tax; and a 0.09 per cent tax will be paid for the withdrawal of $1 million to $5 million.
$12,480 income tax relief
Phillips said with the increase in the threshold for personal income tax from $507,312 to $557,232, PAYE earners would see $12,480 in income tax relief for the year.
"Based upon this relief, PAYE earners would need to make withdrawals of $12.48 million in a year to be in a worse-off position in relation to their tax take, all other things being equal," Phillips said.
The increase in the income tax threshold takes effect next January and is expected to result in a revenue loss of $650 million.
"Despite what is obviously a very difficult situation that many persons face, we have tried, to the fullest extent possible, to minimise the impact on the poorest," Phillips said.
"There is no part of these measures that will have any impact on the broad mass of the population, and it keeps the economic programme intact; it keeps Jamaica's programme intact; it keeps the foundation for more growth and development intact," Phillips argued.
He has challenged critics of the tax measures to put specific suggestions on the table, suggestions to raise revenue that would have minimal impact on the poorest Jamaicans.