Minister of Finance and Planning, Dr. the Hon. Peter Phillips, on November 20 tabled the White Paper on Tax Reform in the House of Representatives, which outlines the main tax-related initiatives to be undertaken over the medium to long-term.
He said the document, which has had the benefit of a thorough consultative process, seeks to facilitate economic growth and development. “I am confident that this tax reform, which seeks a balance between simplicity, fairness and revenue enhancement, will facilitate economic growth,” he stated.
According to Dr. Phillips, the prevailing narrow tax base, together with the indiscriminate granting of waivers and incentives, have contributed to inequities in the tax system and declining revenues, which overtime, increased the fiscal deficit and the debt to Gross Domestic Product (GDP) ratio.
As stated in the Ministry Paper, the Government of Jamaica is committed to an effective tax system that is simple and transparent as possible to allow for ease of taxpayer compliance; fair and equitable in distributing the tax burden; flexible; and consistent with meeting the revenue needs of the budget.
The measures, some of which were implemented in the last Budget, include reducing the standard rate of the General Consumption Tax (GCT); standardization of Corporate Income Tax (CIT) rates; harmonization of payroll taxes; reforming the waivers and incentives regime; and strengthening tax administration.
The 20-page document contains measures to make it easier for persons to file taxes, including using online sources. A taxpayer education programme is to be undertaken this fiscal year, so too collection drives, development and implementation of a compliance incentive programme, and penalties applied for breaches.
The Finance Minister also tabled Ministry Papers on: Corporate Governance Framework for Public Bodies; Public Private Partnerships/Privatization Policy.
The Corporate Governance Framework outlines measures to improve accountability, probability and transparency among public bodies, while the Public Private Partnerships/Privatization Policy seeks to correct significant weaknesses of the early public/private partnerships which included the lack of effective monitoring and inadequate coordination within government.
Dr. Phillips said that some of the papers tabled represent commitments with the International Monetary Fund (IMF) as a precondition for the signing of the 27-month Standby Agreement in February 2010.
“It was the failure to honour these commitments that partly responsible for the abortion of the standby agreement, which in turn, brought an end to the draw-downs of loan financing from multi-lateral development banks, as well as the cessation of substantial amounts of grant financing from the European Union”, the Minister said.