The domestic economy needs to be vibrant — Clarke

The domestic economy needs to be vibrant — Clarke

Observer writer

Friday, September 27, 2019

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Minister of Finance Dr Nigel Clarke on Wednesday evening told a gathering that the reason behind the Government's abolishment and reduction of taxes was to stimulate the domestic industry in order to achieve strong economic growth.

“The large part of the economy is domestic and we need the domestic economy to be vibrant, to flourish and be dynamic. Construction is a part of the domestic economy, design is a part of the domestic economy and we're focused on improving how we efficiently trade goods and services between each other,” the finance minister said, while speaking at a function at Spanish Court Hotel in New Kingston.

The function was one of many scheduled events held in observation of the Jamaica Observer's Design Week 2019, which will end this Saturday, September 28.

Dr Clark explained that while Jamaica has done well in traditional flagship industries such as tourism, agriculture and mining, the Government cannot be too dependent on these industries for growth as they are only a microcosm of what Jamaica can earn.

With this in mind, he said that if the Jamaican economy is to experience strong growth then the economy must become even more diversified.

“The design and creative industries are important; globally they are multi-billion-dollar industries... and we need those industries to flourish here as well,” Dr Clark reiterated.

Earlier in his speech, the finance minister argued that he aims to “catalyse the creation of an economy” in which people are free to create, free to innovate, because when people are free it leads to productive endeavours in ways that we can't programme, in ways that we can't imagine, in ways that we cannot plan.”

This, he said, will spur the creation of new products, and services, new industries, and new sectors.

Reminding the audience that in his last budget presentation he abolished the minimum business tax, lowered stamp duty and transfer tax, among others Dr Clarke said that the collections of these revenue should not be carried out “without any basis in equity”, but should benefit all Jamaicans.

He cited an example of a designer in his constituency, who grieved for not only paying the minimum business tax each year when she filed her returns, but also the asset for 23 sewing machines she owned as part of her business.

“The tax office never asked her whether or not she made a profit that year, they never asked her whether her revenues were higher this year than they were last year. They just said the value of the sewing machines is more than X, [so] you owe me $200,000,” the finance minister explained.

The Government didn't stop there, Clarke said. “We took the knife to the distortionary transaction taxes as far as the transfer of assets are concerned — stamp duty and transfer tax — where we abolished and lowered stamp duty, and we obliterated transfer tax from five per cent to two per cent. And that has unleashed plans to develop urban areas across Jamaica in a way that we have never seen before,” he continued.

Though he expected a lower result than last year, Dr Clarke revealed that revenues from transaction taxes between April and August this year “reflect elevated activity” in construction.

He added that the National Housing Trust (NHT) is aiming to increase housing stock by almost 300 per cent with output moving from 8,000 units in 2016 to 23,000 units next year.

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