Own Budget Financing Stressed by Dr. Davies

Finance and Planning Minister, Dr. Omar Davies, has stressed that it must be understood that increasingly, the country would be on its own with budget financing.
He said this would have to be done either from revenue resources or from loan funds as, “reliance on grant funding must be decreased, because sooner rather than later, there will be very little”.Dr. Davies was opening the 2006/07 Budget Debate in the House yesterday (April 27).
In the last fiscal year, grants amounted to US$11.3 million, in comparison to $18.13 million in 2002/03, and US$9.8 million in 2003/04.
Meanwhile, the Minister said although a start had been made, there was still more to be done to implement some of the proposals in the Matalon Tax Reform Committee Report.
He pointed out that the significant increases in the tax threshold were justified but nonetheless, costly. “The two movements in the income tax threshold translate directly into revenue loss of approximately $2.2 billion to taxpayers, with those at the bottom of the income ladder gaining more in relative terms,” Dr. Davies said.
He noted that there were other important steps to be taken, including a rationalization of “the complex web of incentives granted to various sectors and sub-sectors”.
The Minister said the government’s ability to rationalize the company income tax system was, to a large extent, constrained by this web of incentives. “Take for example, the tourism sector, we cannot discuss a reform of the company income tax for that sector without simultaneously dealing with the matter of the range of incentives given,” Dr. Davies elaborated.
He assured that there was a firm commitment to address this rationalization, not only within the context of the Jamaican tax system, but also from the perspective of the country’s participation in the Caribbean Single Market and Economy (CSME).
Dr. Davies further informed that the government was in the process of obtaining assistance from a multilateral institution to assist with carrying out the required work needed to inform policy changes in this area.