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Withdrawal tax targets institutions - Phillips

Published:Wednesday | April 23, 2014 | 12:00 AM

Daraine Luton, Senior Staff Reporter

FINANCE MINISTER Dr Peter Phillips said yesterday that the Government had taken into account the possibility that banks and other financial institutions might opt to pass on the cost of a levy on bank withdrawals to customers.

Speaking during a post-Budget press conference at Jamaica House yesterday, Phillips also sought to clarify that the nature of the tax had been misrepresented in the ministry paper outlining the new tax measures as a levy on customers.

He said the tax was actually on deposit-taking institutions and securities dealers, which is computed on the basis of withdrawals from these institutions.

The minister said that in arriving at the rate of taxation, the Government decided to "have the rates that were used to calculate this levy being the most minimal".

"If passed on in total, the impact would be minimal, and, further, in order to ensure that the impact would be most restricted on the most vulnerable segments of the population, we also took a decision for a significant increase in the threshold for income tax," Phillips said.

The minister said he met with bankers last Wednesday, prior to the announcement in Parliament, but said he did not know whether the tax was going to be passed on to the customers in higher bank fees.