KINGSTON — Minister of Finance and the Public Service, Hon. Audley Shaw, has shot down the Opposition’s arguments that the Government’s recently announced revenue measures favour the rich.
Closing the 2011/2012 Budget Debate in the House of Representatives, Mr. Shaw emphasised that the only basis for wealth creation is to stimulate investment, and that this is where the Government is placing its focus, as opposed to simply distributing wealth.
“We must move away from the debate of distribution to a debate of wealth creation. We will never have enough resources to distribute to the various demands…therefore, while we continue to increase the social safety net measures, most of the revenue measures presented are geared towards reducing the cost of assets and freeing up idle assets, thereby increasing their market mobility and hence enabling their efficient use in production,” he stated.
Mr. Shaw sited the purchase of a brand new Toyota Corolla as an example, to show the positive impact of the new tax regime on the lives of the ordinary Jamaican.
“A 2011 Corolla (basic model) with a landing CIF value of US$13,370 or J$1.15 million attracting the Customs Duty, SCT and GCT aggregate of 130 per cent will now attract duties of 62 per cent and the purchaser will experience a 32.7 per cent reduction in the overall price of his Corolla,” he outlined.
Therefore, with the new duty regime, the overall price of that vehicle would move from $2.65 million, down to $1.78 million, resulting in a saving of $870,000.
“What about the taxi operator who can now look to purchasing a new vehicle for his household? Is he a rich person?” Mr. Shaw asked.
Furthermore, he said the Automotive Dealer’s Association has endorsed the new tax regime, and stated that the recent changes are expected to increase the Government’s earnings, because of the following:
· The market will be stimulated by price reductions, leading to an increase in sales;
· The incentive to under declare CIF values at Customs will be removed;
· The tendency to abuse concessions will be removed;
· Discretionary waivers will be made redundant by tax reductions; and
· Transactions will be speeded up, because of the elimination of most of the concession process, due to the Common External Tariff being changed to 20 per cent.
By ALPHEA SAUNDERS, JIS Reporter