No Change in Income Tax Threshold


Minister of Finance and Planning, Dr. Omar Davies has said there would be no change in the income tax threshold or the treatment of special allowances during the current fiscal year.
Opening the 2007/08 Budget Debate in the House yesterday (April 12), Dr. Davies said the issue had received significant publicity “with charges of betrayal of a solemn promise,” but “the fact is that when this announcement was first made, I indicated the clear linkage between increasing the threshold and rationalization of the range of allowances, which now clutter the system.”
To effect the increase in the tax threshold on its own with no adjustment to the package of allowances, Dr. Davies stressed, would mean a loss of revenues of $4.7 billion, which he said, “is simply not affordable.” The Minister added that addressing the matter of allowances led to the other difficult situation, which is that the majority of workers in the tourism sector depended on the special treatment of gratuities. He said data showed that if these allowances were formerly taxed, most workers would face significant deduction in their take home package.
“Furthermore, this reduction would not be compensated by any increase in the threshold, nor could anyone reasonably expect that the hotel owners would make up the difference,” he pointed out.
Therefore, the Minister said, the issues transcended revenue considerations as they also impacted on the level of social security contributions and benefits. It was for this reason, he stressed, that the Task Force, which was established to review these matters, had been unable to provide a definitive recommendation.
Dr. Davies said the matter therefore required further deliberations with all stakeholders, including unions, operators, and government to “work out the modalities for the changes which need to be made.”
The Minister informed that he had requested Minister of State, Fitz Jackson to take personal charge of these deliberations, and that he would also be available when necessary, to assist the process.

JIS Social