(Jamaica Gleaner) Finance Minister Dr Peter Phillips yesterday unleashed a $15.9-billion tax package described by his counterpart as ?massive and iniquitous? before Opposition members stormed out of Parliament in anger as Government members used superior numbers and louder voices to suppress their protestations.
Phillips dawdled until late in the sitting, during a lengthy presentation in a debate on the First Supplementary Estimates, before unveiling a tax package that brings almost $40 billion in new annualised taxation that has been slapped on Jamaicans during the 2012-2013 financial year.
The Government had announced $23 billion in new tax measures at the start of the fiscal year.
In addition to the revenue measures, the Government has once again dipped into the National Housing Trust (NHT), stripping it of $11 billion per year over the life of the pending International Monetary Fund (IMF) programme. Phillips said this would be going ?towards the fiscal consolidation efforts?.
While not elaborating on the impact of depriving the NHT of such a significant amount annually, Phillips claimed its mandate would not change and that the Trust would remain committed to its core objective.
It is the third time the NHT has been raided since the P.J. Patterson administration pulled $5 billion from the Trust for purposes other than its core objectives in 2005.
Yesterday, the finance minister used much of his presentation to set the stage for the IMF deal but that failed to ease the concerns of the Opposition.
?This agreement with the IMF is vital to our economic reform programme since among other things it will unlock resources from other multilateral partners,? appealed Phillips, in a clear rallying call.
Employers? portion of the Education Tax has been hiked by 0.5 per cent and the employees by 0.25 per cent. This takes effect on March 1 and is expected to add $2.8 billion in the government?s ever dwindling coffers.
New gct measures
Phillips also introduced a range of new measures related to general consumption tax (GCT) that will come into effect on March 1.
The telephone call tax (TCT) has been included in the taxable base for the purpose of calculating GCT. The tax is expected to yield $1.3 billion.
He announced that all fees and taxes paid at the ports as part of the GCT base are expected to rake in another $1.5 billion. Another $200 million is expected to be earned through an amendment to the legislation to account for GCT on the face value of prepaid vouchers/airtime.
The finance minister revealed that an increase in income tax on dividends payable to residents to 15 per cent is expected to yield approximately $800 million. This, Phillips said, is in an effort to continue to broaden the tax base and the harmonisation of income tax rates.
Phillips hopes to take away another $1.2 billion on the imposition of a surtax on the taxable income of large unregulated companies (with gross income equal to or greater than $500 million). That is to be implemented on April 1, ahead of the presentation of the 2013-2014 Budget.
He is also poised to snatch $1.2 billion from the introduction of Customs Administration Fee (CAF). Phillips told the House that the CAF, which will be imposed on all imports, will replace the current Customs User Fee and other processing fees payable at the ports.
Phillips argued that this would represent a more accurate reflection of the services being offered by the Jamaica Customs Department and would be in keeping with World Trade Organisation guidelines.
Stamp duty up
Phillips has also hiked local stamp duty rates as well as transfer tax to scrape away another $2 billion while he estimates that he would be collecting yet another $1.5 billion from an increase of the fees on the gross profit structure for betting, gaming and lotteries.
He also announced $3.4 billion was expected to be earned through a reform of the property tax rate regime and efforts to increase the low property tax compliance rate.
Last night Phillips said: ?It is important for all who seek the speedy conclusion of the Fund agreement, which include many on that side ? it does not happen before us having to make some adjustment on the way we operate ? .?
New revenue measures
General Consumption Tax measures
- Inclusion of the telephone calls tax (TCT) as part of the GCT base ? $1.3 billion to be earned
- Inclusion of all fees and taxes paid at the ports (environmental levy, CUF/CAF, CET and ASD) as part of the GCT base ? $1.5 billion to be earned
- Amendment to the GCT Act to account for GCT on the face value of prepaid vouchers/airtime ? $200 million to be earned
[All to be implemented March 1, 2013]
Income tax measures
- Increase the tax on dividends payable to residents to 15 per cent ? $800 million to be earned
- Imposition of surtax on the taxable income of large ?unregulated companies? ? $1.2 billion to be earned
- Increase in the education tax rate ? $2.8 billion to be earned
[All to be implemented April 1, 2013]
Trade (border) tax measures
- Application of a Customs Administration Fee (CAF) on all imports (except for charitable organisations, bauxite sector ? $1.2 billion to be earned
[All to be implemented April 1, 2013]
Other revenue enhancement initiatives (including compliance measures)
- Increase the local stamp duty rate and transfer tax (on properties) ? $2 billion to be earned
- Amendment to the fee and gross profit structure for betting, gaming and lotteries ? $1.5 billion to be earned
- Reform of the property tax rate regime and initiate measure to increase low property tax compliance rate ? $3.4 billion to be earned