'Leave our money' - Shaw rips into Gov't over bank-withdrawal levy
Daraine Luton, Senior Staff Reporter
OPPOSITION SPOKESMAN on Finance Audley Shaw has outlined a nine-point proposal for economic growth on the island that includes a suggestion that stamp duty and transfer tax be rolled back by one percentage point each.
At the same time, Shaw has blasted the Government for the proposed implementation of a bank-withdrawal tax, which he describes as "cruel and iniquitous".
Making his contribution to the 2014-2015 Budget Debate in the House of Representatives yesterday, he said that that tax, too, should be rolled back. Instead, he added that the Government should find the projected revenue through public-sector reform.
"I call on you (Finance Minister Dr Peter Phillips) to find $2.25 billion of fat and inefficiency in the bloated bureaucracy and leave people's hard-earned money alone," Shaw declared to thunderous desk thumping on his side of the aisle.
He told the House that during the time he served as minister of finance, the bank-withdrawal levy proposal was brought to him, but he rejected it.
The opposition spokesmen said the banks would heap additional costs on the backs of customers and justify it by saying additional persons and additional computer technology were required to carry out the process of deducting and paying over the taxes to the Government.
In proposing areas of the public sector that could be cut, Shaw said the Government should reduce foreign travel, and whenever trips are made, they should accommodate smaller delegations.
He has also proposed a smaller budget at the Jamaica Information Service and a cut in the number of consultants in the public sector.
Since taking office in January, 2012, and up to February this year, the Portia Simpson Miller-led Government has spent $117.8 million in overseas trips. The cost of trips paid for by the Office of the Prime Minister was $25 million for staff and $15 million for the prime minister alone on her 25 trips.
Additionally, answers presented to Parliament in November 2012, 11 months after taking office, showed that the Government had engaged 98 consultants at a cost of more than $255 million.
Shaw has warned that the modification of the alcohol regime to unify the special consumption tax (SCT), which now applies to alcoholic beverages, could harm both the tourism sector and the local white rum production market.
The measure will see a duty of $1,120 per litre of pure alcohol being paid on such beverages, starting yesterday.
Ruinous to rum industry
At present, overproof white rum attracts an SCT of $960 per litre of pure alcohol, while alcoholic beverages in the tourism sector attract $700 per litre of pure alcohol.
"It will be ruinous to the cherished and world-renowned white rum industry in Jamaica," Shaw said in relation to the harmonisation rate for rum.
He noted that the decision of the Government in 2012 to amend the regime for white rum to be taxed at $960 per litre of pure alcohol not only led to the Government collecting between a 230 and 260 per cent increase in the taxes from the source, but also caused a reduction in white rum sales.
He argued that Worthy Park Estate, producers of Rum Bar white rum, has had to cut 50 workers as a result of decreased sales due to the tax.
Already, J. Wray & Nephew Ltd has announced that the price of products produced and sold by the company will be increased. It said the recommended price for a drink of Wray & Nephew White Overproof Rum at the bar is now $90, up $10. Shaw said the new tax would make imported liquor such as vodka cheaper and would push Jamaican white rum farmers out of business. A drink of vodka costs about $80.
As it relates to the hotel sector, Shaw said one company had reported to him that it would see a US$2-million increase in the cost for its alcohol as a result of the harmonised tax rates, which he said would affect the competitiveness of Jamaica as a tourism destination.
Shaw, in putting forward his nine-point growth plan, said removing the one percentage point from transfer taxes and stamp duties would stimulate greater transactions and yield additional income from the increased volume of transactions.
The Government in 2012 increased stamp duty from three per cent to four per cent and transfer tax from four per cent to five per cent.
Audley Shaw's nine-point plan
- Stabilise exchange rate.
- Ramp up education and training at all levels.
- Remake JAMPRO into a well-oiled investment and trade-facilitation machine.
- Fast-track new and cheaper sources of energy.
- Provider greater access to low-cost credit.
- Recapitalise the EXIM Bank of Jamaica.
- Reduce transfer tax and stamp duties.
- Increase the National Housing Trust lending ceiling.
- Fast-track the divestment of the Kingston Container Terminal.