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Public’s reaction to bank tax more ‘emotional’ than ‘analytical’ - Hyman

Published:Tuesday | April 22, 2014 | 10:54 AM

Jovan Johnson, Gleaner Writer



KINGSTON, Jamaica:

Financial analyst Ralston Hyman says reactions to Finance Minister Dr Peter Phillips’ announcement of a tax on withdrawals from deposit taking entities are more emotional than analytical.




There has been growing opposition to the tax on withdrawals from deposit-taking institutions since it was announced last week Thursday.



Phillips says the tax on withdrawals is aimed at raking in about $2.3 billion in revenue.



Hyman says the poorest Jamaicans and those in the middle class are the least likely to be affected as the bulk of the tax will be on the big banks.



He says the tax is prudent given that the two largest commercial banks, the National Commercial Bank and the Bank of Nova Scotia control about 75 per cent of deposits, loans and assets in the economy.



Hyman says persons who feel they will be burdened by commercial banks passing on the fees to them have the option of joining institutions such as credit unions which have lower fees.



He also says if the withdrawal tax is to be removed, he would suggest a greater increase in the asset tax.



Phillips says for specified entities regulated by the Bank of Jamaica and the Financial Service Commission, the rate is to be increased from 0.14 per cent to 0.25 per cent.



However, Hyman says the banks can withstand a greater increase.



The withdrawal tax will be calculated on a graduated rate system, with withdrawals less than $1 million being subject to a 0.1 per cent tax.



This means that Jamaicans will pay $1 for every $1,000 they withdraw from deposit-taking institutions through electronic banking, point of sale transactions, cheques, banking hall transactions, ABMs, ATMs, and Internet transfers.



The only exception is Internet transfers made by a person between accounts in the same financial institution.



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