KINGSTON — Finance and Public Service Minister, Hon. Audley Shaw says that a tax reform process is to be undertaken, which is planned for implementation in three stages.
The move is in keeping with the medium-term (three-year) tax policy framework proposed for Jamaica, which is aimed at simplifying and ensuring equity in the tax system, while meeting the revenue demands of the Budget.
Minister Shaw, who opened the 2011/12 Budget Debate in the House of Representatives on April 28, explained that the first stage of reform will address duties on international trade, the Special Consumption Tax (SCT), and the General Consumption Tax (GCT), with corporate and personal taxes to be dealt with during the second stage, while the third phase of reform will address payroll taxes.
“Changes to the tax rates – the GCT rate – among others – will be implemented over a three-year period. Changes in the purview of income tax will be implemented on a calendar year basis (effective January 1 – at the beginning of the tax year), to allow for smooth transition. Additionally, there will be a pre-implementation (grace) period, after the announcement of a specific timetable to sensitize the public to changes, so that taxpayers can make the necessary adjustments,” he informed.
Minister Shaw, in his presentation entitled ‘From Stabilisation to Growth’, stated that Government has committed to implementing tax reform in an incremental way, to achieve the objectives of simplicity, equity, and broadening of the taxpayer base and improve compliance, growth and competitiveness arising from policy certainty and confidence in the economy.
“Most importantly, the measures must meet the revenue demands of the Budget while maintaining macro-economic and social stability,” he noted.
Minister Shaw told the House that extensive consultation and research on tax reform have been undertaken with private sector interests engaged, as well as Tax Administration, Customs Department, Revenue Protection Division, Planning Institute of Jamaica (PIOJ), Statistical Institute of Jamaica (STATIN), and the Ministry of Labour and Social Security.
He informed further that the Ministry has hosted an inter-agency meeting with the PIOJ, STATIN, Ministry of Labour and Social Security, and the Inter-American Development Bank (IDB), regarding amendments to certain Schedules of the GCT Act, as well as measures to enhance social expenditure. The inter-agency collaboration is expected to continue in the coming months, and will be informed by public discussion and technical analysis.
“It is also important to ensure that all tax reform proposals are compliant with the various trade agreements under the World Trade Organisation (WTO), Caribbean Community (CARICOM), etc.,” Minister Shaw stated.
By DOUGLAS McINTOSH, JIS Reporter