Brace for new tax package next month
THE Government plans to drop a tax package ahead of reform measures aimed at increasing compliance and simplifying the system.
Yesterday, Finance Minister Dr Peter Phillips said that he hopes to present a white paper on tax reform with the upcoming budget next month, but added that a tax package would have to be implemented separately.
It is not yet clear what taxes will be targeted in the upcoming package, but the Government definitely plans to cut waivers and incentives in the near term.
"The present system of waivers is complex, complicated and inefficient and is in need of urgent reform," said Phillips in a speech at a Jamaica Exporters' Association luncheon held yesterday at the Terra Nova Hotel in Kingston. "There were two months last year when the value of waivers exceeded the value of revenue collected by customs."
Customs duty alone brings in over $1.5 billion a month into the government coffers, while the combined taxes on international trade totals well over $7 billion monthly. If waivers are running at similar levels, the Government possibly gives up anywhere between $18 billion and $80 billion annually, based on Phillips' pronouncements.
"The truth is, if the situation is allowed to continue, we will not make any progress towards our development," he said. "As such, we will have to make adjustments to the waiver regime; and this will require sacrifices by us all in the near term."
The tax reform committee of Parliament has concluded public hearings and is now considering the recommendations to make a full report.
The finance minister added that all the various recommendations provided by non-government groups would have to be reconciled against the tax reform green paper tabled last May — all of which will be woven together to "make sense technically".