Tax Reform Will Promote Equity – PM Holness

Prime Minister, the Most Hon. Andrew Holness, said the Government intends to continue the overhaul of the tax system to promote reliability, equity and economic efficiency.

            Mr. Holness made the comment during his Budget Debate presentation in the House of Representatives on May 24.

            As part of the reform process, the Government is moving to increase the personal income tax threshold to benefit some 251,000 Pay As You Earn (PAYE) workers.

            Effective July 1, 2016, the threshold will move to $1,000,272 and to $1.5 million on April 1, 2017.

            The Prime Minister noted that personal income tax has proven to be uneven and administratively complex “as few people pay and those who do, don’t pay on all their income.”

            “The burden is therefore placed on the few trapped in the PAYE system while their counterparts escape,” the Prime Minister said, underscoring that the Government is focused on developing solutions.

            He said that the tax reform will also improve work incentives as employees will retain all their earnings, as well as provide a motivation for the formalisation of small businesses.

            “Under this tax reform, the Government will rely on administratively simpler mechanisms for revenue, with fewer collection points. This will improve revenue certainty and fiscal credibility, securing more revenue for the Government to spend on services for the poor,” he said.

            Mr. Holness said it will also serve to advance the Government’s push for economic growth and investment.

            Mr. Holness said the Government will also address any inequities associated with the new tax regime through a cash transfer system to directly supplement the income of the poor and vulnerable.

            He added that the country will be relying on international partners for technical assistance in the analysis and design, as well as bilateral assistance for the implementation and application of the technology required for an effective system.

            Head of the International Monetary Fund (IMF) Staff Mission Team to Jamaica, Dr. Uma Ramakrishnan, welcomed the Government’s move to amend the income tax threshold.

            Speaking at the IMF quarterly review media briefing on Friday, May 20, she described the move as a “bold step” in restructuring the revenue regime.