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Phillips promises to table ministry paper on tax changes

BY BALFORD HENRY Senior staff reporter balfordh@jamaicaobserver.com

Friday, May 23, 2014    

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MINISTER of Finance and Planning Dr Peter Phillips has assured the House of Representatives that he will bring a ministry paper to Parliament soon, to have the revised tax measures he announced in the House of Representatives on Tuesday approved.

Dr Phillips gave the assurance after Opposition spokesman on finance and planning, Audley Shaw, raised the issue again during the debate on amendments to the Firearms Act.

"The ministry paper will come to the House, and as far as the revenue implications (are concerned) the revenue estimates overall remain as they were," Phillips said.

The issue is related to Tuesday's statement to the House of Representatives by the minister, in which he announced changes to the tax measures which he had tabled in April to raise $6.7 billion to fill the gap created by the 7.5 per cent primary surplus target.

This measure should have become effective from April 22. However, after the hotel sector raised concerns about the effect on their operations, their portion of the tax was delayed to allow for consultations while the tax was imposed on bars, clubs and other sources of liquour sale.

Dr Phillips had informed the House that the specific additional stamp duty regime for alcoholic beverages sold in the hotel sector, would be amended by decreasing the specific additional stamp duties (ASD) on wines, liqueurs and cordials from US$1.60 per litre to US$1; and on beers from US 90 cents to US 60 cents per litre.

In addition, he said that, in order to counter some of the impact of the new measures, the Government had also taken the decision to provide tax relief of approximately $200 million to the hotel industry.

Explaining the Government's generosity to the hotel sector, Phillips said in his statement that, in terms of the reduction in the specific ASD on alcoholic beverages, the changes were being made consequent on two things: the impact that the unification of the special consumption tax is likely to have on the tourist industry's continued competitiveness; and (2) a "more rigorous calculation" of the revenue to be garnered from the alcoholic measures, which has revealed that significantly more revenue would have been received.

However, the minister did not state when the "more rigorous calculation" of the projected revenue was done, or whether it was his ministry that had failed to recognise that significantly more revenue would have been collected from the measure than the $844 million projected in the original ministry paper.

Tuesday night, Shaw told the Jamaica Observer that he would seek a full explanation from the minister as to exactly what happened.

"He has not explained what is the new revenue picture, and the bottom line is that what I am seeking is the details," Shaw said.

The Opposition spokesman also noted that the matter was not discussed within the taxation committee of the House, nor was a new ministry paper with the proposal changes tabled, as is the usual procedure.

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