No Additional Burden from Indirect Taxation – PM

Prime Minister the Most Hon. Andrew Holness, says the Government’s tax strategy to shift from personal income tax to indirect taxes, will not place additional burden on Jamaicans.

He noted, instead, that it will allow citizens to have greater control of their own money, by giving them more of their income to spend and, essentially, enabling them to make wiser decisions about their consumption.

“Putting it that way makes the tax system more efficient, but more than that, it gives you, the income earner who is also a consumer, the ability to have a greater determination on how much tax you pay by virtue of making a determination on how much consumption you will do,” he said.

The Prime Minister was responding to questions posed by journalists during a post-Budget press conference held at the Office of the Prime Minister on Wednesday (March 22).

Under the new tax arrangement, the Government has increased the personal income tax threshold to $1.5 million effective April 1.

A total of 397,083 of the 469,131 Jamaicans, who are on the Pay As You Earn (PAYE) tax roll, will now be exempt from paying taxes because they are now completely below the $1.5 million tax threshold.

The first phase took effect in July 1, 2016, when the personal income tax threshold was increased from $592,800 to $1,000,272, benefiting more than 250,000 taxpayers.

The Prime Minister also assured that this is not a measure to raise additional revenue.

“We made a commitment to give the Jamaican people more of their income to spend… . The commitment is revenue-neutral for the Government. The Government has not earned additional revenue as a result of this tax package,” he explained.

Mr. Holness further noted that the Government will raise the additional taxes needed to make the change neutral by putting it on consumption items.

He said the benefits of the measures will be evidenced by more reliable revenue; “that means we won’t have to resort to borrowing because we have had a shortfall”.

“Inevitably, the income earner, the consumer is going to be better off, and inevitably, Government’s resources, in terms of the revenues that it will raise, will be more certain and predictable. Jamaica is better off for that move,” he said.

Speaking on the new income tax arrangement last year, Minister of Finance and the Public Service, Hon. Audley Shaw noted that “$26.6 billion is being put back into the hands of people”.

“Everybody is, ultimately, going to benefit… even those who don’t directly get money by way of a payback because they are below the threshold,” he said.