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Government outlines new tax measures in Budget Presentation
IN HIS first budget presentation as Jamaica’s Finance Minister on Thursday May 24, 2012, Dr. Peter Phillips outlined a series of taxes and measures sure to affect business owners as well as the ordinary citizen. Dr Phillips sought to outline the provisions of what he termed “A New and Binding Covenant”.
In this way, he sought to “repair” the “trust deficit,” which has says has taken hold with Jamaica’s major stakeholders. In particular, he believes that the strategies outlined will assist Jamaica in achieving stability, equitable growth and prosperity. According to the Minister, the following will be critical success factors for this new covenant:
- Fiscal and debt sustainability
- Tax Reform (to be implemented over a 3-year period beginning in current fiscal year)
- Public Sector Transformation
- Facilitating Business Development
- Reduction to vulnerability to oil price volatility
The Minister characterized the local context as one of “persistent low growth, deep fiscal imbalances and unsustainable public debt which has resulted in a worsening of economic and social conditions in the country which has been especially brutal on the poor and marginalized segments of the society.”
A number of tax measures, as outlined below, have been identified to reduce the reliance on debt financing.
New Tax Measures
General Consumption Tax
|
Measure |
Effective Date |
Yield ($b) |
| GCT standard rate to be reduced to 16.5% (to be further reduced later on) |
June 1, 2012 |
-2.4 |
| Widen the GCT Base by reducing the list of exempt/zero-rated products |
June 1, 2012 |
4.2 |
| Increase GCT on electricity to standard rate and increase threshold for residential customers from 200kWh to 300kWh |
June 1, 2012 |
0.43 |
| Introduction of a dual taxation system for the accommodation sector |
September 1, 2012 |
2.53 |
Income Tax
|
Measure |
Effective Date |
Yield ($b) |
| Corporate Income Tax rate to remain at 33 1/3% for regulated companies but reduced to 25% for unregulated ones |
January 1, 2013 |
-0.45 |
| Introduction of a Minimum Income Tax |
January 1, 2013 |
0.66 |
| Increase the Personal Income Tax threshold from $441,168 to $507,312 |
January 1, 2013 |
-0.1 |
| Imposition of 5% tax on dividends payable to Jamaican residents |
June 1, 2012 |
0.3 |
Asset Tax
|
Measure |
Effective Date |
Yield ($b) |
| Modify the Asset Tax for financial institutions to a rate of 0.2% and a flat rate for non-financial institutions |
June 1, 2012 |
1.95 |
Common External Tariff
|
Measure |
Effective Date |
Yield ($b) |
| Increase CET on selected items, including motor vehicles & spare parts, jewellery, glass, alcohol |
June 1, 2012 |
1.95 |
Motor Vehicles
|
Measure |
Effective Date |
Yield ($b) |
| Increase motor vehicle licenses, licence plates, fitness andregistration by 50% |
June 1, 2012 |
0.5 |
Telephones
|
Measure |
Effective Date |
Yield ($b) |
| Changes to termination cost for telephone calls |
June 1, 2012 |
5.25 |
Other
|
Measure |
Effective Date |
Yield ($b) |
| SCT to be imposed on Over Proof Rum at a rate of $960 per litre. The 30% ad valorem rate will be rescinded |
June 1, 2012 |
0.75 |
| Modify alcoholic regime for tourism |
June 1, 2012 |
0.53 |
| Increase tax rate on winnings |
June 1, 2012 |
0.38 |
| Introduction of SCT of $10.50 per 0.7g unprocessed tobacco product |
June 1, 2012 |
0.38 |
| Introduction of SCT on denatured ethanol |
June 1, 2012 |
0.54 |
| Curtail Discretionary Waivers |
June 1, 2012 |
1.88 |
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