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IMF ties minister's hands - 'Urgent' move takes away power to grant waivers to charities

Published:Wednesday | May 15, 2013 | 12:00 AM

 Edmond Campbell, Senior Staff Reporter

MINISTERIAL POWER to grant waivers to charitable organisations was yesterday removed with the passage of a bill which has made provisions for harmonising the treatment of charitable organisations for the purpose of taxation.

"What this does is to curtail ministerial power in relation to granting waivers to charities and to confer that power statutorily under these acts to the appropriate tax authorities - Customs or the Tax Administration Jamaica," explained Finance Minister Dr Peter Phillips, who piloted the bill yesterday in Gordon House.

The move is part of a structural benchmark within the extended fund facility agreed between the Jamaican Government and the International Monetary Fund (IMF) as well as the multilaterals.

CURTAILING DISCRETION

"The matter was considered so urgent by both the Government of Jamaica and the Fund and other multilaterals, including the IDB (Inter-American Development Bank), that there should be a demonstration of a commitment to immediately curtail the exercise of discretion at the ministerial level and to put this on a transparent basis," said Phillips.

He said the measure has been introduced because of concerns shared by both the multilaterals and Jamaica that the current regime in relation to the treatment of charitable organisations allowed for the possibility of significant revenue loss by way of tax expenditures.

However, this will be a temporary measure as the Government will, in September this year, take to Parliament a Charities Act. This new statute will incorporate a reference to the Charitable Organisations (Tax Harmonisation) Act.

Phillips said the proposed Charities Act is now with the Office of the Chief Parliamentary Counsel for drafting.

For the 2010-2011 financial year, the Government granted waivers to charitable organisations amounting to $4 billion while the sum for the 2011-21012 period was $2 billion.