Bankers oppose ABM tax
THE Jamaica Banker's Association (JBA) says Government's proposal to impose a tax on withdrawals from deposit-taking institutions and encashments from securities dealers may discourage some individuals and businesses from utilising the formal banking system.
The JBA, which is the latest organisation to oppose the tax proposed by Finance Minister Dr Peter Phillips when he opened the budget debate on Holy Thursday, said, too, that the proposal not only conflicts with the country's aim to achieve greater financial inclusion, but would encourage greater activity in the informal economy.
The measure is projected to raise $2.25 billion as part of Government's efforts to plug the gap in the budget, but the bankers said it was concerned that the Administration did not present a more equitable and sustainable strategy to meet the shortfall in revenue for the 2014/2015 fiscal year.
The JBA also expressed concern with Government's decision to raise an additional $1.788 billion with an increase by 80 per cent of the Asset Tax for deposit-taking entities regulated by the Bank of Jamaica.
"The solution cannot be to impose repeated and increasing demands on the financial sector that is the most compliant and one of the largest contributors to tax revenues. As it stands, financial institutions are already subject to the higher rate of corporate income tax at 33.3 per cent, compared to 25 per cent for other companies. Financial institutions also suffer much higher rates of Asset Tax, compared with all other companies," the JBA said in a statement last night.
"These same financial institutions have already supported the Government's debt-reduction strategy through the Jamaica Debt Exchange and the National Debt Exchange.
"It is the considered view of the JBA that a more prudent and equitable strategy would be for the Government to strengthen its efforts to increase tax compliance. Presently only 10 per cent of all registered companies in Jamaica file corporate income tax returns, a situation which is untenable if we are to move this country forward on the path of economic growth," said JBA's statement.
It said, however, that it was ready to have meaningful dialogue with the Government that would result in a more balanced approach to solving the nation's fiscal problems and nurturing opportunities.