- Reforming the country’s tax code will bring about a fairer tax system, which will promote growth and bring in revenue.
- The Omnibus Legislation is aimed at creating a level playing field when it comes to taxation.
- The Income Tax Relief Act provides for the designation of large scale projects and pioneer industries.
Head of the Department of Economics at the University of the West Indies (UWI), Dr. Damien King, says that reforming the country’s tax code will bring about a fairer tax system, which will promote growth and bring in revenue.
Dr. King made the comment in light of the recently passed Omnibus Legislation, which seeks to establish a transparent and coherent regime to govern all tax incentives.
The economic professor, who was speaking on the Jamaica Information Service’s (JIS) television programme Issues and Answers recently, said that a reformed tax code “allows you to deal with the equity issue more fairly.”
“It has no drawbacks. A simpler and more uniformed tax code improves on all fronts. There is nothing to be gained from a convoluted, complex, unfair tax system. When you have a tax system that uses up resources that can only be exploited by large companies…. nothing is gained,” he stated.
Dr. King also welcomed the level playing field that is being made possible through the Omnibus Legislation.
“If you can only stay in business by not paying taxes then you should not be using up resources, working capital, labour, factory space. Those resources must go into profitable businesses that can cover all of its costs and as long as you are usurping those resources, while making losses and not paying taxes, you are holding the economy back,” he stated.
“Let’s have everybody paying the same tax rate, regardless of your name or industry or business and all the resources go to producing goods and services,” he added.
The Bills comprising the Omnibus Legislation are the Fiscal Incentives (Miscellaneous Provisions) Act; and the Income Tax Relief (Large Scale Projects and Pioneer Industries) Act 2013.
The Fiscal Incentives Act sets out the reforms to be carried out to the corporate tax structure including the introduction of an Employment Tax Credit (ETC), changes to the capital allowance regime, and revision of provisions governing the utilisation of tax losses. The Bill also deals with “grandfathering” and transitional arrangements relating to change from the old to the new incentives regime.
The Income Tax Relief Act provides for the designation of large scale projects and pioneer industries that would qualify for tax credit under the Income Tax Act.
Other elements of the framework for the new Omnibus Incentive Regime namely the (Customs Tariff (Revision) (Amendment) Resolution 2013 and Stamp Duty (Amendments of Schedule) Order 2013, have also been approved.
Extensive work on the Omnibus Legislation was piloted by a Ministry appointed Incentives Working Group, comprising private and public sector stakeholders, and headed by noted economist, Dennis Morrison.