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JIS News

A well-known financial analyst has come out in support of the Government’s decision to impose a consumption tax on fuel, saying this move to realign the tax structure is more equitable to over-burdened PAYE taxpayers.
Colin Steele, a member of the Board of the Pan Caribbean Financial Group and a respected financial analyst, told JIS News that he is generally in favour of increasing consumption taxes vis-a-vis payroll taxes, as only 300,000 of the 1.1 million workers in Jamaica are in the Pay As You Earn (PAYE) category, with large numbers of persons escaping the tax net.
“This is a much fairer and more equitable system, as it shifts the burden of taxation from the relatively small number of people carrying the tax burden,” Mr. Steele said in the exclusive interview with the JIS News.
He said that raising the income tax threshold and targeting assistance to those most in need of assistance is the way to go, if we are serious about tax reforms in Jamaica. He pointed out that a consumption tax on gasolene and other consumption taxes would pull in those who traditionally do not bear their fair share of the tax burden. “So, when we skew taxation towards consumption, large numbers of persons who can afford to pay are forced to do so, while Government can target assistance to those who are most vulnerable,” he said.
Mr. Steele is also in favour of boosting resources to secondary education, while discontinuing the practice of Government subsidising tertiary education by 80 per cent.
He argued that he is in favour of resources being made available for students to access through the Students Loan Bureau, so that they can finance their own tertiary education.
On the tough decision by the Government of a wage freeze on public sector salaries, the Financial Analyst said the Government has no choice in light of the constraints imposed by the global financial crisis and the structural problems of the Jamaican economy.
“Your bauxite/alumina exports are down, your sugar industry is down, your remittances are down, your private capital flows are almost non-existent and your tourism will be affected, so you have very few options,” he stressed. “If you grant wage increases to public sector workers, that will fuel an inflationary spiral and further devaluation, which would more than wipe out those increases anyway. The only way out of the crisis is to grow your way out and to take sound fiscal decisions,” he told JIS News.
He said in light of Jamaica’s high debt burden and sluggish exports, the country was forced to constrain its spending and increase its revenues. He said Jamaicans have to adjust to the current realities and that the Government has to focus on those strategies which would enable the country to get on a growth path, once the global recession is over. “We will get past this difficult cycle, but we have to ensure that when the global recession recedes, we are ready to exploit the opportunities,” he said.