Withdraw ATM tax by Wednesday, Shaw tells Phillips
OPPOSITION spokesman on finance and planning Audley Shaw says the Government should, by Wednesday, announce a withdrawal of the financial transactions tax which it has proposed to take effect on June 1.
"I am calling on this minister of finance on Wednesday to announce the withdrawal of the tax on bank transactions," he said, making reference to Dr Peter Phillips' scheduled adress in the House of Representatives this week to close the budget debate.
Shaw's comments came while addressing delegates at the Jamaica Labour Party (JLP) Area Council One (Corporate Area) monthly meeting at Dunoon Park Technical High School in East Kingston, yesterday.
As part of new tax measures to plug a $6.7-billion gap in the 2014/15 budget, the Government announced on April 17 that withdrawals from deposit-taking institutions and security dealers will attract a graduated transaction tax rate, to earn some $2.25 billion in revenue.
However, there has been massive resistance to tax from the Opposition, civil society and financial institutions. Consequently, Dr Phillips said last week that he would review the proposals.
Shaw said that Phillips must ensure that the matter is discussed at today's meeting of the Cabinet, and that a decision be taken to withdraw the proposal.
Shaw said that he fully supported the position of Leader of the Opposition Andrew Holness "when he threw down the gauntlet in the House of Representatives on Thursday", calling on the Government to "remove the tax, or else".
He said that, in addition to the reasons he had given in the House for the tax not to be implemented, surveys have shown that most Latin American countries which have imposed bank transactions taxes have found that more people turned to cash transactions and away from the formal banking system.
"In other words, they are avoiding the formal banking system. They are going strictly into cash transactions," he said.
He noted that the Government has been discouraging cash transactions, which was the reason Minister of National Security Peter Bunting had piloted a measure in the House of Representatives to limit cash transactions to one million dollars.
In October last year, Bunting piloted an amendment to the Proceeds of Crime Act, which placed a $1 million limit on cash transactions through financial institutions. The measure stated that under the provisions for the reporting of suspicious transactions, cash transactions of over $1 million cannot be undertaken by anyone other than a "permitted person", such as a bank or licensed financial institution.
Shaw said that the second reason the tax should be withdrawn is that, while the Government might collect the $2.25 billion it plans to net this year, it will affect General Consumption Tax (GCT) revenues as those people who move into total cash transactions will not pay GCT on their transactions.
"They are going to avoid paying GCT by using cash...So what the minister will find is that he will collect his money on the transaction tax, but when you look at GCT, which already was lower last year than anticipated, he might find that as a result of this move, the level of the combined revenue from consumption tax will therefore fall," the Opposition spokesman pointed out.