KINGSTON – The Opposition yesterday ripped into the revenue package announced last week by Finance Minister Audley Shaw, accusing the Government of burdening Jamaicans with taxes to satisfy partisan political interests, and calling for the measures to be withdrawn.
“The Government should wheel and come again,” Opposition Spokesman on Finance Dr Peter Phillips said in his 2017/18 budget debate presentation in Gordon House.
He warned that the brunt of the tax package will not be felt until 2018/19 when the full cost of the increase in the income tax threshold will be completely absorbed into the Government’s accounts and the economy.
“The current budget is not the last in which we will count the cost of these disastrous policies… Look out for more taxes,” Dr Phillips said.
He argued that, while only people earning below the $1.5-million threshold will benefit from the tax break, the burden of the new taxes will capture a much wider net of people, including the poor. He asserted that with the new tax threshold taking effect on April 1, three months after the tax year begins, the effective threshold will average $1.4 million, not $1.5 million.
The Opposition spokesman pointed out that, although improvements in PATH benefits will help, the social safety net programme only accounts for 320,000 people, with figures from the Government’s chief planning agency suggesting that there are 540,000 people below the poverty line.
“It would be useful to know if a tax incidence study was done to see what effect these taxes would have on the distribution of national income… I suspect that based on the range of indirect taxes increases imposed in the last two budget cycles, these policies will have resulted in one of the most significant redistribution of income from the poor to the rich in the history of this country on the basis of a policy choice by a sitting Government,” he declared.
Dr Phillips also argued that the tax policies would negatively impact businesses and the general competitiveness of the local economy, pointing to the increase in the special consumption tax on fuel, inclusive of heavy fuel oil used by the Jamaica Public Service Company. This revenue measure accounts for $7.4 billion or more than half of the $13.5-billion tax package.
“When you just change willy-nilly taxes without warning, then what you’re doing is affecting economic decisions… it is no way to run a country. You can’t run it like that,” he said.
Dr Phillips also pointed to the imposition of General Consumption Tax on group health insurance premiums, arguing that with a still grossly inadequate public health system it is prudent for citizens to buy health insurance, but to increase the cost of premiums would erode benefits, and will be devastating to people such as cancer patients.
The finance minister on Monday defended the Government’s revenue package, stating that it had been carefully considered by the Cabinet.
“This is the best decision we can take at this time,” Shaw commented following a post-budget press conference at his ministry. He emphasised that the tax policies form part of the Andrew Holness-led Administration’s decision to shift from direct taxation to indirect taxes in order to facilitate a more equitable spread of the tax burden among Jamaicans. (Jamaica Observer)
