Fri | Sep 29, 2023

Fitz Jackson wants withdrawal tax rollback

Published:Saturday | April 26, 2014 | 12:00 AM

A GOVERNMENT backbencher has joined the growing list of Jamaicans calling for the rollback of the withdrawal tax, arguing that the proposed levy would end up being a burden on consumers.

Fitz Jackson, whose motion on bank fees is before a parliamentary committee, told The Gleaner yesterday that he objects to "any tax, any levy being placed or being charged to deposit holders for withdrawal of funds being held at any financial institution".

Finance Minister Dr Peter Phillips has signalled that he is reviewing the $6.7-billion tax package, which involves a move to raise $2.25 billion through the withdrawal tax.

"What is non-negotiable is that we have to get the revenues to enable us to meet the primary surplus target," Phillips said.

The new 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.

The island's financial institutions have indicated they would be passing on the levy on bank withdrawals to customers.

But Jackson said he was uncomfortable with the possibility of the tax being passed on to customers. He said the tax must be structured in such a way that this does not happen.

"If you say it is on each withdrawal that each person makes, it opens the window for that to pass through. If it is a tax to be borne by the institution, then it negates that," he argued.

He said the Government should resist any move by the banks to pass on the additional burden to be borne by the financial institutions on to customers' shoulders. He said Phillips should amend the ministry paper on tax measures to make it clear that the levy cannot be debited to account holders.