Calls to extend Junior Market tax benefits grow louder
The calls keep coming for the Government of Jamaica to extend the time frame for the tax incentive for companies which seek to enlist on the Jamaica Stock Exchange’s (JSE) Junior Market.
While addressing the 11th Regional Conference for Investment and Capital Markets on Monday, JSE General Manager Marlene Street-Forrest stated: “We have just begun to rise and as we widen our imaginations to the staggering potential results of unleashing our Caribbean entrepreneurial spirit when backed by an efficient and supportive capital market, we must continue to press for government policies and programmes that are aimed at removing ‘red tape’, supporting innovation and incentivising growth.”
Street-Forrest’s request was supported by chairman of the Jamaica Stock Exchange, Allan Lewis, who was more forthright in his plea to Prime Minister Portia Simpson Miller – the evening’s keynote speaker. Lewis underscored the contribution of the JSE to Jamaica’s “macroeconomic stability”, according to the IMF’s 10th review dated December 2015, as well as the country’s economic growth and development, and strength of the financial system before addressing Simpson Miller.
“Having set the stage, Madam Prime Minister, it behooves me to raise an important point on behalf of all stakeholders involved in the Jamaica Stock Exchange and that is the current incentive regime to promote the listing of new companies on the Junior Market,” he said.
He continued: “We are aware and comforted that the Government supports the exchange and understands its importance for economic growth and shared prosperity. Additionally, we have had and continue to have discussions with the Minister of Finance and officials from the ministry, but we suggest that in the absence of an alternative regime, the Government extends the current arrangement for a limited time, the suggestion being one year, and give the policymakers enough time to promulgate an effective alternative.”
Lewis expressed appreciation for the prime minister’s recognition of the JSE’s performance during 2015, particularly Bloomberg’s announcement that the JSE, for 2015, was the best performing stock market in the world, which Simpson Miller acknowledged in her New Year’s message. However, he added: “We have ideas for alternatives that we hope will satisfy the conditions of your Government, but we submit that the least desirable outcome is for the current regime to terminate without an alternative in place. We hope you agree.”
On Wednesday after making his presentation at the JSE conference, Finance Minister Peter Phillips answered the question of extending tax incentives to interested companies.
The minister explained that the ending of the tax incentive does not signal the termination of the Junior Market programme, adding that his ministry is still in dialogue with the JSE for the extension of the benefit. He further noted that the JSE tax waiver was being considered “under (IMF recommended) tax reforms”, which aim to “decrease income tax and broaden the base” for collection.
Earlier in a CEOs breakfast meeting, Grace Kennedy CEO Don Wehby, who as minister without portfolio in the Ministry of Finance under the JLP Administration had overseen the implementation of the JSE Junior Market, stated: “To make any changes to the Junior Stock Exchange is very wrong.” He added that such changes would defeat the purpose for which the Junior Market was created, which is to attract new companies to enlist.
Even earlier this month, at the listing ceremony of CAC 2000 and tTech, Victoria Mutual Wealth Management CEO Devon Barrett said: “On another note, I use this opportunity to join my colleagues in the investment sphere in urging our Government to reconsider the planned termination of the corporation tax break to companies listing on the Junior Market of the Jamaica Stock Exchange (JSE). While I hear the arguments that this benefit has been abused and that the GOJ is giving away much-needed tax dollars, I submit that those are more than compensated…”
Barrett listed four reasons why the tax waiver benefit has been successful and should be continued:
1. Increased PAYE taxes to be paid by new employees of the ramp[ed]-up entity.
2. Increased import duty on the additional raw material being used by the company.
3. Increased GCT on the sale of the additional goods produced and sold by the company.
4. Increased stamp duty, withholding tax and GCT from successful investors in these companies who invest in other asset classes or consume some of their gains.