The Private Sector Organisation of Jamaica (PSOJ) yesterday suggested that income tax be either significantly reduced or replaced by more broad-based and simpler methods of revenue generation, as one means of producing the level of growth needed in the economy this year.

In a statement issued by president Chris Zacca, the PSOJ said that while it welcomed increased efforts to widen the tax net, an overhaul and redirection of the tax system would encourage the informal sector to enter the formal sector thereby spurring business activities, fuelling growth and encouraging greater tax compliance.

“What is needed today is a radical overhaul of the framework that businesses operate under in Jamaica,” Zacca said. “To this end, the PSOJ will be actively researching and lobbying for measures designed to increase the rate of growth of the economy.”

The measures, he said, are “likely to include a significant overhaul of the tax system, including the significant reduction and possible removal of income tax in favour of more broad-based and simpler methods of revenue generation that create less disincentives for compliance and encourage formal business development and entrepreneurship”.

The suggestions come amidst concerns raised by the Opposition and the trade union movement about the failure of the Government to honour a commitment made in 2005 to increase the income tax threshold from the current $193,440 to $275,000 from January 1.

The proposals by the PSOJ, the umbrella body of Jamaica’s privately owned businesses, are the most radical from any critic of the budget so far.

The statement said that the budget debate, which was opened by the minister of finance and planning, Dr Omar Davies, in Parliament last Thursday, is incapable of producing the level of growth the economy requires.

It said that for Jamaica to compete in the global market, the growth that is necessary must be encouraged.

“The minister noted minimal growth in the goods producing and service sectors and also moderate GDP growth,” said the PSOJ. “Whilst cheaper credit to small business and entrepreneurs is welcome, there is very little else in the budget that will spur the significant growth needed to fuel the economy.”

It said, however, that the organisation stands ready to support initiatives that will realise the growth and development needed, and pointed to Dr Davies’ reference to the need for significantly higher levels of resources for education and training, as well as the need to prioritise a social partnership, as the most positive signs coming out of his opening budget presentation.

“The PSOJ believes that the chronic lack of growth that has plagued the Jamaican economy for many years is the cause of many of the problems that now face our country,” the PSOJ said.

“For Jamaica to compete in the global market, the growth that is necessary must be encouraged and the Government must put the necessary plans in place,” the organisation added.