- Finance and Planning Minister, Dr. the Hon. Peter Phillips, says he will announce in Parliament, some of the concrete steps that are to be taken to reduce and virtually eliminate discretionary tax waivers.
- He was speaking on Monday night, February 11, during a joint national broadcast to the nation with Prime Minister, the Most Hon. Portia Simpson Miller.
- The move, he said, is part of the prior actions that the country will have to take in order to secure the support of the board of the International Monetary Fund (IMF) for an Extended Fund Facility.
Finance and Planning Minister, Dr. the Hon. Peter Phillips, says he will announce in Parliament, some of the concrete steps that are to be taken to reduce and virtually eliminate discretionary tax waivers.
He was speaking on Monday night, February 11, during a joint national broadcast to the nation with Prime Minister, the Most Hon. Portia Simpson Miller.
The move, he said, is part of the prior actions that the country will have to take in order to secure the support of the board of the International Monetary Fund (IMF) for an Extended Fund Facility.
“We will also need to have a contract in place with public sector workers, which will enable the achievement of a wage to GDP (Gross Domestic Product) ratio of nine per cent by 2015/2016. We are in active discussion with the representatives of public sector workers to achieve this objective,” Dr. Phillips stated.
He informed that already, a number of adjustments have been made as part of the conditions for an Extended Fund Facility.
“Earlier in 2012, we began some of the necessary adjustments. We raised the primary surplus (which is the difference between revenues and non-interest expenditure) from 3.1 per cent to in excess of 5per cent, which entailed a major revenue package and stringent expenditure controls. We also advanced the tax reform initiative by reducing GCT (General Consumption Tax) rates, expanding the base, lowering other tax rates and raising the threshold on Personal Income tax,” Dr. Phillips said.
He noted that the Government also finalised the White Paper on tax reform, removed some 3,000 posts from the public sector establishment and negotiated a wage restraint contract with public sector workers covering the 2010/2012 contract period.
“We have also instituted a Central Treasury Management System, which will be progressively rolled out to all Ministries, Departments and Agencies during the course of the year,” he stated.
He noted however, that if the country is to meet its objectives and secure the support of the IMF and the wider global financial community, including the multilateral lending agencies, the private financial entities and in the international investor community, more must be done.
“We must intensify the process of fiscal consolidation by further raising our primary surplus to 7.5 per cent over the life of the Extended Fund Facility. We have to intensify our tax reform efforts and in particular, virtually eliminate discretionary waivers whilst strengthening the Tax Administration Department. To secure greater levels of tax compliance, we must also simplify and broaden the tax base,” he stated.
He said that among the structural reforms being undertaken, Public Sector Transformation is an urgent priority in order to ensure greater efficiency and cost effectiveness in the public sector.
These reforms will be bolstered by an extensive legislative programme. The enactment of a new Omnibus Incentives Act and a new Charities Act, along with amendments to the Revenue Administration Act, will form part of this legislative agenda.
Another conditionality was the required passage of a Public Debt Management Act, which was completed.
Perhaps the most urgent of the conditionalities arising from the negotiations with the IMF is the requirement of a debt reduction programme, which the Government launched on Tuesday morning, February 12.
Dr. Phillips stated that the negotiations to secure a new Extended Fund Facility agreement with the IMF have been long and hard and commended the team “that has fought hard on every issue to secure the best terms for Jamaica. The end of these negotiations is now in sight”.