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    • The first phase will see the threshold being increased to $1,000,272 on July 1, 2016, while the second phase will result in the threshold being pushed to $1.5 million on April 1, 2017. Some 251,000 PAYE workers will then fall below the threshold, up from 118,000 previously.
    • Measures to replace the income tax revenue vacuum of $12.5 billion, announced by the Minister, include a $7 per litre increase in the Special Consumption Tax (SCT) on petrol, expected to yield $6.4 billion; an SCT regime for Liquefied Natural Gas (LNG) and Heavy Fuel Oil (HFO) to yield $1.4 billion; and an increase in the SCT on cigarettes, cigars, cigarillos and cheroots (including substitutes) to yield $574 million. He also announced an increase in Departure Tax to US$35, to yield $5.3 billion.
    • “We saw in this Budget a move from direct taxation to indirect taxation, which the literature has indicated is not deleterious to growth, so we expect that as persons have more disposable income they will spend and we will see an uptake in the medium to long-term,” she said.

    Experts at the Ministry of Finance and the Public Service have indicated strong support for the benefits of the tax reform initiative announced by Portfolio Minister, Hon. Audley Shaw, on May 12.

    Opening the 2016/17 Budget Debate in the House, Mr. Shaw said the income tax threshold for all Pay As You Earn (PAYE) workers will be increased from $592,800 to $1.5 million, which will be implemented in two phases.

    The first phase will see the threshold being increased to $1,000,272 on July 1, 2016, while the second phase will result in the threshold being pushed to $1.5 million on April 1, 2017. Some 251,000 PAYE workers will then fall below the threshold, up from 118,000 previously.

    Econometrician at the Ministry, Aayon Cruikshank, said with the threshold movement, the tax reform will benefit everyone, leading to a removal of what he calls “distributional kinks”.

    He was speaking in a live broadcast of a special post-Budget Jamaica Information Service (JIS) panel discussion, immediately following Mr. Shaw’s presentation.

    “Once you have removed those distributional kinks, then you won’t have that issue of persons having less incentive to work,” he said.

    Director of the Taxation Policy Division in the Ministry, Shauna Trowers, commended the plan, pointing out that it will also benefit self-employed persons as well as pensioners.

    Measures to replace the income tax revenue vacuum of $12.5 billion, announced by the Minister, include a $7 per litre increase in the Special Consumption Tax (SCT) on petrol, expected to yield $6.4 billion; an SCT regime for Liquefied Natural Gas (LNG) and Heavy Fuel Oil (HFO) to yield $1.4 billion; and an increase in the SCT on cigarettes, cigars, cigarillos and cheroots (including substitutes) to yield $574 million. He also announced an increase in Departure Tax to US$35, to yield $5.3 billion.

    Miss Trowers further hailed the move to indirect taxation as being well-crafted, particularly considering the overall ethos of economic growth adopted by the Government.

    “We saw in this Budget a move from direct taxation to indirect taxation, which the literature has indicated is not deleterious to growth, so we expect that as persons have more disposable income they will spend and we will see an uptake in the medium to long-term,” she said.

    Meanwhile, Associate Professor of Taxation, Accounting and Finance at Northern Caribbean University (NCU), Audley Eccles, who participated in the panel discussion, commended the proposal and gave credit to the Ministry’s technical team.

    He allayed concerns that tax on gas might have an inflationary effect, noting that he does not expect this to be the case.

    Mr. Eccles said he is happy to see that the tax measures will raise enough revenue to make up for the shortfall from the increase in the income tax threshold.