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Finance minister defends $13.5-B tax package
SHAW... when prices at the pump go down, you never hear JATOO complaining (<strong>Photo: Garfield Robinson)</strong>
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BY ALPHEA SAUNDERS Senior staff reporter saunders@jamaicaobserver.com  
March 12, 2017

Finance minister defends $13.5-B tax package

The Government has signalled that it will not be resiling from its $13.5-billion tax package, despite the growing disquiet from various sectors since Finance Minister Audley Shaw outlined the revenue measures for 2017/18 in Parliament last Thursday.

Speaking at a post-budget press briefing at the ministry’s Heroes’ Circle offices yesterday, Shaw stressed that the tax package had been strategically designed and that the decisions were not taken lightly. He again reiterated the Administration’s decision to shift from direct taxation to indirect taxes in order to shift the burden from PAYE workers to a more equitable spread.

Addressing the call by the country’s major health insurance providers to reconsider the General Consumption Tax (GCT), which the Government intends to impose on group health insurance policies, Shaw dismissed concerns that companies would cut off their employees’ insurance plans or reduce benefits.

“The tax on group health insurance goes to employers not employees… it is unlikely that companies will bother their employees by passing this on to them. Also, there are regular increases by the two health insurers, and these are absorbed by the local employers and not passed on to their employees. We, therefore, do not see the GCT on these policies as a burden on existing companies to reduce the level of insurance for their staff, neither do we see this as a disincentive for companies that want to provide insurance for their staff,” the finance minister said.

He argued that the group insurance cost per employee at the highest level is approximately $5,000 monthly, which means that the 16.5 per cent tax would translate into $700 per employee for the month.

“I am suggesting to Mr Byles that this also is an opportunity for the companies to see themselves playing their own part in helping to encourage further worker productivity by saying, ‘If we are making a contribution to preserve your health insurance…this is all a give and take, this is everybody working together’,” the finance minister continued.

President and chief executive officer of Sagicor Group Jamaica Richard Byles is among the health insurance providers who have spoken out against the imposition of the tax, suggesting that the Government should look elsewhere for the $1.88 billion in revenue which the levy is expected to contribute to the consolidated fund. The tax becomes effective on April 3.

The finance minister also sought to allay concerns among the public and transport operators that increases in the Special Consumption Tax on fuel will be passed on to commuters.

“When oil prices go down and prices at the pump go down, you never hear JATOO (Jamaica Association of Transport Owners and Operators) complaining… the price of oil on the world market is not set to escalate at all, if anything, it’s set to go down… direct to indirect taxation… it cannot be escaped by the habitual tax dodger. When you go to fuel, you must pay, that’s indirect taxation (and) that’s the policy of the Government,” he insisted.

The increase, which takes effect tomorrow, ranges from $0.43 to $7.36 per litre for the various fuel types. The other revenue measures include increases in the special consumption taxes on tobacco products and pure alcohol, as well as a 20 per cent spike in motor vehicle licensing fees, the reimposition of withholding tax on general insurance premiums paid by Jamaican residents to non-residents, and a lowering of the kilowatt-hour usage for residential electricity that GCT is charged on from 350kwh per month to 150kwh.

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