'Even more taxes coming'
KPMG Jamaica, the local arm of the global auditing firm, expects more taxes will follow the latest announced measures within this fiscal year.
The firm described Government's newly announced tax package as needed but expedient.
"So far, new and higher taxes have been necessary. Based on the 2014/15 revenue measures announced by the Ministry of Finance, this fiscal year will be no different," stated KPMG in its Post Budget Tax Bulletin 2014/5 dated April 17. "What is not clear is whether the new and higher taxes announced today are all part of the tax reform action plan or are the most expedient measures to fill the $6.69 billion gap in the budget. We believe it is the latter. We expect that there will be more to come in 2014/15 which is more in line with the tax reform action plan."
KPMG issues periodic bulletins to its clients and/or colleagues in order to cut through "complexity" on matters of taxation. The Jamaican partnership is a member firm of the KPMG network of independent firms affiliated with KPMG International Cooperative, a Swiss entity.
The auditing firm contextualised that "we are now fully immersed" in the tax reform action plan heralded by the Green Paper on Tax Reform For Jamaica tabled by the Ministry of Finance in 2011.
"In the last 18 months, a number of the tax measures which were often only debated in the past have found their way into the tax laws of Jamaica," reasoned KPMG. "The year 2013 saw a full slate of legislation being ushered through the Houses of Parliament to meet the Government of Jamaica's various commitments to the International Monetary Fund (IMF), and we can clearly see more than a framework of the tax reform landscape."
Last Thursday, the Government explained that the $540.1 billion budget would receive funding from projected revenues and grants of $421.2 billion. Additionally loan receipts of $110 billion will finance the shortfall in addition to using banking system balances of $1.4 billion and new tax measures totalling $6.7 billion.
The Government expects to gain $2.3 billion in revenue from the introduction of a levy on deposit-taking institutions and encashments from securities dealers.
The government expects to gain another $1 billion in revenue by proposing to increase the rate of tax on gross premiums earned by regional and non-regional life assurance companies to a standard 5.5 per cent, and also to increase the 15 per cent income tax on net investment income to 20 per cent for all insurance companies.
An additional $1.7 billion is expected from an increase in asset tax, plus another $1.2 billion in revenue from the proposed redirection of the percentage of the Special Consumption Tax (SCT) on petrol, which currently goes to the Road Maintenance Fund, to Central Government and the Consolidated Fund.
Governemnt expects to yield $844 million from changes to taxation of alcoholic beverages, plus a further $250 million from the modification of the duty regime for specified motor vehicles and another $26 million from General Consumption Tax (GCT) on the sale of older second-hand vehicles.