JIS News

President of the Private Sector Organisation of Jamaica (PSOJ), Joseph M. Matalon, sees the Government’s latest tax package as “necessary”, in light of the impact of the global economic crisis on Jamaica.
In an interview with JIS News Friday (December), Mr. Matalon, while describing the tax package as “very significant” and “perhaps one of the largest in the history of the Jamaican economy”, cited its necessity under the current circumstances.
“These are, in fact, tough times and tough measures are required in tough times,” he said.
Mr. Matalon, who is also chairman of the ICD Group, chaired the Tax Policy Review Committee appointed by former Minister of Finance and Planning, Dr. Omar Davies, which examined each of the main sources of tax revenue and their impact on the economy and handed in a report to Government in November, 2004.
That committee also comprised 12 professionals from the private and public sector and the trade unions, including Dr. Wesley Hughes, accountants -Ethlyn Norton-Coke, Elizabeth Jones-Kerr, Eric Crawford, Allison Peart and Wildred Bagaloo, attorney-at-law Mark Golding and trade unionist Lloyd Goodleigh.
Mr. Matalon said that while there is no question, that their recommendations will impose a burden on the Jamaica people, he believes, particularly in the context of the fiscal constraints facing the Government, that the measures are necessary.
“I believe that there is recognition among the (private sector) membership, including our (PSOJ) association membership, that tough measures were required, and I think it was anticipated that, in addition to those initiatives already announced that are designed to compress the level of public expenditure, there was going to be the need to raise significant additional revenue,” he explained.
The PSOJ President pointed out that measures, such as the increase in the GCT rate and the widening of the tax base via the removal of exemptions, reflected the organisation’s position and were recommended in their 2004 report.
He was disappointed that there was not a more aggressive widening of the tax base, however.
“We believe that the Government may find that there are diminishing returns in terms of revenue performance from increases in the rate of GCT, and that it would have been much more efficient, from an economic standpoint, to have even further widened the base and use the additional revenue generated to actually reduce the rate of GCT,” he contended.
He said that one of the PSOJ’s main disappointments with the announcement was the “fairly narrow range” of taxes targeted, rather than a more “comprehensive approach” to incorporate various other tax inputs and regimes, such as corporate and personal income tax and property tax.
“The property tax is a tax that has underperformed for many years. The level of compliance has been very low, something in the order of about 40 per cent, I believe. So we would have liked to have seen measures designed to address the performance of property tax,” he said.
Mr. Matalon alluded to the impending increase in the personal income tax threshold to just over $440,000, effective January 1, 2010, pointing to its consistency with the PSOJ’s recommendation for a “very significant increase” in this area.
“We had also recommended, as a part of the Tax Reform Committee’s report, that the threshold be subsequently indexed either to inflation or to the exchange rate, in order to maintain its value over time, but that has not been done,” he pointed out.
Other recommendations, Mr. Matalon contended should be considered, include: unification of the tax structure; simplifying it in the process; and a more comprehensive reform of the tax regime across all of the various tax types.
Mr. Matalon pointed out that a “fair amount” of representation has been made to the administration on the concerns resonating, through the National Planning Summit, and the series of expert teams that were formed under the Summit, which report to a monitoring board chaired by Industry, Investment and Commerce Minister, the Hon. Karl Samuda.
He added that the PSOJ, recently, in a document entitled, “The PSOJ’s Economic Policy Framework”, outlined policy prescriptions that the organization felt could produce strong sustained growth in the Jamaican economy.
“We are in the process, now, of consulting with our sister associations, including the Jamaica Manufacturers’ Association (JEA), Jamaica Exporters’ Association (JEA), Jamaica Chamber of Commerce (JCC) and a number of other associations, maybe 25 or 30 in all, to try and arrive at a consensus in relation to that policy framework,” he said.
“That will become the platform for our advocacy with the Government, in terms of implementation of those economic policies which we believe can generate sustained rates of strong economic growth,” Mr. Matalon contended.
Meanwhile, President of the Small Business Association of Jamaica (SBAJ), Dalma James, told JIS News that, against the background of the announcement, the organisation was in the process of establishing a “one stop shop” to help their members with their tax matters.
While not providing details, Mr. James, explained that the association will have to strengthen its management information department to help members to better manage their cash flow and day-to-day (operations).
“We already have some systems in place, which are working, to enable them to bulk buy and, through these mechanisms, save on normal operating costs,” he explained.
He added that the SBAJ will continue to work with the Government on policies and procedures that will benefit the sector.
“We have been trying to get them to have systems in place which are going to pump equity, instead of loans, into the new businesses, and hope that we can get them to sponsor the types of businesses that are going to lead to rapid economic growth,” Mr. James stated.
President of the JEA, Vitus Evans, cited the need for exports to be “incentivised”, thereby exploring levels and categories of tax breaks that can be afforded, particularly in areas generating significant income. He also pointed to the need for increased production and productivity.

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