JIS News

Minister of Finance and the Public Service Hon. Audley Shaw, is expected to clarify issues surrounding the imposition of General Consumption Tax (GCT) on computers and books today (May 6) when he closes the 2009/10 Budget Debate at Gordon House.
Prime Minister the Hon. Bruce Golding, who made the announcement in his Budget speech yesterday, said that the Government has listened carefully to the arguments.
He stated that most of the computers sold are not for educational purposes, but for business and personal use. He also pointed out that books and computers to be used for educational purposes have been exempted from tax.
With reference to the other taxes imposed, the Prime Minister noted that in structuring the tax package, the Government was guided by the recommendations of the Matalon Tax Policy Review Committee which was established in 2003. He said, however, that the Government was careful not to implement all the recommendations of the committee, which would have been more burdensome.
“They recommended that GCT be charged on water, electricity, transportation, real estate transactions and construction. We didn’t go that far,” the Prime Minister pointed out.
Mr. Golding also underscored the need to shift the tax burden from Pay as You Earn (PAYE) workers, by moving towards more indirect means of taxation such as consumption taxes, which would make the system simpler and more equitable.
“No one likes to raise taxes, especially when people are already under so much pressure” he said, as he appealed for understanding.
The Prime Minister also explained that this year’s tax package would help to reduce the Government’s appetite for borrowing.
“We cannot continue borrowing and borrowing. We will get to a stage where debt service payments will wipe out everything else. We will get to a stage where the entire budget can be printed on a few sheets of paper,” Mr. Golding commented.
He also insisted that banks were becoming unenthusiastic about lending to investors. He explained that this is so because the Government continues to borrow heavily from local banks, which more readily invest in Government paper than lend money to entrepreneurs.
“Money is something that cannot remain idle. It has to find work to do. It looks for the easiest work that carries the least risk, Government paper. If less Government paper is available, that money has to find meaningful work. Investors won’t have to look for money. Money will look for them,” Mr. Golding stated.
Though the Government plans to scale back on borrowing, the Prime minister has reassured that this will not be done suddenly, as it would send shocks through the financial system.
Mr. Golding also made it clear that the fiscal tightening currently being undertaken could not be abandoned after the crisis has subsided.

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