Minister of Finance and the Public Service Audley Shaw returned from his International Monetary Fund (IMF) engagements last week in time to safely pilot two important growth Bills through the House of Representatives.

The minister had promised to handle a Bill amending the Income Tax Act to give the minister powers to institute the benefits of the Junior Stock Exchange (JSE), as well as a Bill to make provision for the regulation of providers of international corporate services and international trust services.

The Bill shortly entitled, “The Income Tax (Amendment) Act, 2016”, basically repeals and replaces the seventh schedule of the original Act, by providing income tax incentives listed on the Junior Stock Market. It was passed on Tuesday.

It definitely laid to rest the controversy surrounding the future of the Junior Stock Market, which had plagued the previous Government.

Since taking office, Shaw advised the country that the new Administration would be continuing the operations of the Junior Market. Quoting from a report on the JSE, he pointed out that while profits tax was foregone, businesses were expanding and deductions were growing, significantly.

According to the data, compared with 2009 when the facility was established under Shaw’s leadership, the National Housing Trust reported that contributions from businesses increased by 86 per cent, while National Insurance Scheme contributions increased by 120 per cent.

In addition, Pay As You Earn contributions went up by 97 per cent, and General Consumption Tax tax earnings climbed by 337 per cent, moving from about $200 million to almost $1 billion.

“So we gave up some profits tax, but we earned all of these other streams, people got jobs, and they contributed to economic growth,” Shaw pointed out recently.

The Junior Market was established as a result of the collaborative efforts of the Government, the board of the JSE, the Financial Services Commission and a steering committee made up of key stakeholders.

However, in regard to the controversy over the future of the market, former Minister of Finance Dr Peter Phillips had confirmed in the House in January that there were no plans to phase out the Junior Market after April 1 this year, as had been rumoured.

“We are currently looking at the entire range of issues of what can be done to incentivise listing of private companies on the exchange…we will do everything we can to facilitate its continuation,” Phillips stated.

He had also promised to report on the outcome of those deliberations during the 2016/17 year. But the February 25 General Election intervened and the new Administration took charge, prior to the budget debate.

There was bipartisan support for the new Bill in the House on Tuesday.

On Wednesday, Shaw opened the debate on the Bill entitled “An Act to make provision for the regulation of the providers of international corporate services and international trust services; and for related matters”.

This Bill follows the creation of the Jamaica International Financial Services Authority, which was established with a mandate to promote and develop Jamaica as a centre for international financial services. The Bill seeks to regulate persons who will provide these international corporate and trust services.

Since 2009, Shaw has been insisting on the need to establish an International Financial Centre (IFC), despite concerns raised by world powers United States of America and Britain about offshore tax havens.

The previous Government had raised concerns since then about the wisdom of positioning Jamaica as an offshore centre, since the United States and Britain had indicated that they would block companies from using offshore facilities.

Governor of the Bank of Jamaica Brian Wynter also raised concerns in 2011, stating that an IFC in Jamaica would pose “major potential dangers” to the country, if not properly regulated.

“Many IFC institutions are branches or subsidiaries of conglomerates whose structure pose a potential danger to financial stability,” Wynter stated then.

However, Shaw has insisted since that the establishment his Government was proposing did not equate with creating an offshore banking industry or a tax haven.

“The concept of the IFC represents another innovative and pragmatic mechanism through which the Government will seek to unlock Jamaica’s potential as a player in the global financial market,” Shaw explained.

“It is the Government’s intention to provide a location where the services of accountants, lawyers, financial advisors, information technology specialists and clerical workers can be accessed,” he added.

However, there was no dissent when the Bill came up in the House of Representatives on Wednesay, as the Opposition felt that the necessary regulatory protection was included in the Bill.

*** The eventual decision by the University of the West Indies (UWI) to allow Jamaica’s Public Administration and Appropriations Committee (PAAC) to probe its expenditure in Jamaica is certainly the right move.

The PAAC is one of 10 sessional committees of Parliament and is among those which, since 2008, have been chaired by Opposition MPs. It has the task of monitoring spending by all Government ministries, departments and agencies.

In 2013 its role was expanded, in terms of its parliamentary oversight, to ensure that Government expenditure is in accordance with what has been approved by Parliament, specifically in controlling the debt, and would include the tabling of half-yearly economic performance reports.

The PAAC is required to consider, usually in November of each year, the status of the medium-term economic programme; the progress on meeting the specified fiscal targets — including the fiscal deficit/surplus and the primary surplus; the resource and borrowing needs for the remainder of the current fiscal year; and the implications for the specified targets for the ensuing fiscal year in the context of the medium-term economic programme.,

However, it is noteworthy that despite several attempts and its best efforts between 2013 and 2015, the previous committee, chaired by current Tourism Minister Edmund Bartlett failed to get Chinese construction firm, China Harbour Engineering Company (CHEC) Ltd to appear.

At one stage the committee set a date and actually convened to hear from CHEC about outstanding payments owed to a large number of local contractors involved in government programmes under the Jamaica Development Infrastructure Programme/Jamaica Emergency Employment Programme. But, CHEC did not show.

Instead, the committee’s secretary read a letter from then Minister of Transport, Works and Housing Dr Omar Davies which suggested that it would not be a good precedence demanding the appearance of companies like CHEC before the committee. So, CHEC never appeared before the committee.

This week’s Gordon House schedule:

Tuesday, October 18: 9:00 am — Constituency Development Fund Committee; 10:00 am — Infrastructure and Physical Development Committee; 2:00 pm — Sitting of the House of Representatives;

Wednesday, October 19: 10:00 am — Public Administration and Appropriations Committee; 2:00 pm — Sitting of the House of Representatives.