Business
Jamaica: Proposed tax reforms to increase revenue, stimulate growth
(Jamaica Observer)- Proposed tax reforms will add $JMD7.14 billion (US$ 80 million) to government coffers despite a reduction in the corporate income tax (CIT) rate from 1/3 of profits to 15 percent.
And the long-term benefit will be even greater as more companies become tax compliant and the reduction in rates encourages investment, the Private Sector Working Group on tax reform predicted yesterday.
Only 5 percent of registered companies currently pay CIT, said the working group, chaired by Joseph Matalon. To counter this, a proposed minimum tax of $JMD100,000 (US$1,157) or 0.5 percent of revenues, whichever is higher, would be levied on all 60,000 registered companies.
However, the working group’s models were unable to forecast how much of an effect the changes would have on revenues in the future, nor was it able to quantify the impact on exporters, though it insisted they would be positive.
“We have finally run out of options that would allow us to avoid the hard choices,” Matalon said. “The only really viable solution to our economic and solical ills are high and sustained rates of economic growth and job creation.”
Tax reform is also at the top of the list of things the International Monetary Fund (IMF) wants the government to undertake.
The working group had aimed to get unanimous support for its proposals but failed to bring the Jamaica Stock Dealers Association, the Jamaica Hotel and Tourism Association and the Jamaica Agriculural Society on-board.
Sandals, the country’s largest resort group, said in a statement that it supported the broad thrust of the reforms, but was waiting for more data, including the results of an Oxford Economics report, before making its final recommendation on tourism taxation.
