THE Bustamante Industrial Trade Union (BITU) says that in rationalising taxation measures, the Government is not paying enough attention to the measures affecting the workers, who are also affected by the erosion of the dollar.

“The BITU believes that in the continuing efforts to rationalise taxation, more attention should be paid to the mechanisms affecting the workers, who are equally affected by the erosion of the Jamaican dollar, and to a greater extent the consequential increases in the cost of living affecting basic needs such as food, shelter, clothing, energy and the cost of utilities,” BITU president, Senator Kavan Gayle, said in a statement issued last week by the union.

“While there are meaningful efforts to offer more incentives to promote investments, there has been little or no effort to promote increased productivity and production, which are also essential to growth and development,” Senator Gayle said.

“There is hardly any recognition of the need to offer more incentives to the workers, not only to increase productivity at the workplace, but also to increase the investment of their earnings in activities which are essential to growth,” he added.

Senator Gayle said that an example of the omission has been the failure of the Government to address the long-running issue of the tax on concessionary loans offered to workers in the financial sector.

He said that the BITU has been urging the Government to amend legislation concerning the rate of interest workers in the financial sector pay on concessionary loans for some two decades, because the loans are a fringe benefit negotiated by the union, and increase the current threshold of these loans from $1.5 million.

He recalled that, in 1991, the tax was placed on these loans by the Ministry of Finance and Planning, as a temporary revenue-earning measure, to help finance the budget that year. However, the matter has not been revised in the 23 years since, and the taxation has become a burden to the deserving workers.

“As the trade union which primarily represents workers in the financial sector — including employees of the Bank of Jamaica, merchant, commercial, and development banks, insurance companies, credit unions, building societies, and trust companies — we have been seeking the support of the ministry in reviewing these provisions for years without success,” Gayle said.

“We believe that in light of the current economic situation, and the effect it has been having on these workers, as well as the fact the Government has announced an intention to commence talks with its own employees in the public sector at an early date, that some attention must be paid to the issue immediately,” he added.

Gayle explained that employees in most local financial institutions are designated beneficiaries of the concessionary loan, but have to pay a tax on the difference in interest payment between the concessionary rate and the prescribed open market rate.

The difference between the concessionary rates granted by a financial institution and the open market rate represents a cost saving to the borrower. However, this was declared by the ministry as income in 1991, under income tax law, attracting a tax of 25 per cent on interest saved on loans that exceeded a threshold of $1.5 million. But, while loans of up to $1.5 million were exempted from the tax, with the provisions unchanged over the past 22 years, the concession has been severely reduced and only serves to disenfranchise the workers, Senator Gayle said.

He stated that BITU has been seeking to draw the attention of the Ministry of Finance and Planning to the disadvantages which have been created by its failure to review these provisions.

“We do not think that it is fair that a fringe benefit granted by employers to employees, as part of their compensation package, should be reduced to a disincentive because of the Government’s insistence of disregarding the intent of the provision of the relevant legislation,” he explained.

He said that the BITU is again seeking the cooperation of the ministry of finance, on the eve of fresh wage negotiations with the public sector and the compilation of the 2015/16 budget, to revise the provisions of the taxation, in keeping with current concessionary loans and general market trends.

He said that the union wants the Ministry of Finance and Planning to revise the open market rate prescribed in the tax provision from 14 per cent, and increase the taxable threshold from the current $1.5 million to an amount reflective of current costs associated with the stipulated purposes — purchasing a house for owner’s occupancy; purchasing a motor vehicle for private use; purchase of land; education; emergency needs (compassionate loans); training; and furnishing of residence for owner’s occupancy.

He said that the union is urging the ministry to give immediate attention to the prolonged issue, as it has become a matter of great disaffection among workers in the financial institutions, and is also soliciting the support of the Jamaica Bankers’ Association (JBA) in urging Government to remedy the situation.