OPPOSITION Leader Mark Golding has slammed the Andrew Holness Administration for its failure to move the income tax threshold from $1.5 million to $3 million, and questioned the decision to introduce a $20,000 reverse tax credit to people earning less than $3 million annually.

Making his contribution to the 2024-25 Budget Debate in Gordon House on Tuesday, Golding noted that during the recent local government election campaign Holness promised that the income tax threshold would be increased, “in what he said would be a 1.5 2.0”.

“After the prime minister’s grand election pronouncement of a ‘1.5 2.0’, persons are understandably very disappointed that the [Finance] Minister [Dr Nigel Clarke] has announced an increase of the threshold to only $1.7 million. What they expected to be 2.0 million ended up being 0.2 million. This translates to a mere $4,166 more per month in their take-home pay,” said Golding.

“If the minister had, as Phase 1 of restoring the value of the $1.5 [million], even increased the threshold to $2 million, that would give persons an additional $125,000 per year ($10,400 per month) in their take-home pay. That would be a much more meaningful benefit,” added Golding.

In his presentation in the budget debate last week Clarke argued that the Government was not able to move the threshold higher at this time because it would be giving up too much revenue, which could affect economic stability.

According to Clarke, in an effort to provide a break to 570,000 people who would not benefit significantly, or none at all, from the hike in the income tax threshold, the Government has instead decided to introduce a reverse tax credit of $20,000 to people earning less than $3 million per annum.

He said the reverse tax credit means that every registered taxpayer who, in a completed fiscal year, did their part in contributing to society — whether through PAYE (Pay as you Earn) or being self-employed — and who earn under that threshold will receive the reverse tax credit.

“The cost of this programme is $11.4 billion and we [the Government] consider this money well spent,” said the finance minister.

But in response Golding charged that the reverse tax credit was only designed to incentivise on-time filing and the paying of statutory deductions.

“That objective is really questionable because to qualify for this he [Clarke] says you have to become fully compliant for the 2023 tax year by March 31, 2024. That deadline is less than two weeks away, therefore as a practical matter it is most unlikely that anyone who is not already tax-compliant will get the benefit.

“Furthermore, it is wishful thinking that a single payment of $20,000 will induce anyone, who is now outside the tax system, to take steps to bring themselves into it and start paying taxes,” argued Golding.

He pointed out that last September he had called for an increase in the threshold from $1.5 million to $3 million, to restore the real value of the increase which was granted in 2016 and to provide some buffer for future inflation.

“The fact is that, since 2016, accumulated inflation is over 46 per cent in Jamaica, and an increase is required to restore the real value of the threshold that was last reset in 2016. And it could be paid for using the $11.4 billion that has been allocated to the one-time, $20,000, so-called reverse tax credit,” said Golding.

“In getting to $3 million, as tax inflows continue to grow, the threshold can be again adjusted as phase two,” he said.

“Jamaica needs caring governance; that’s why we are on the road to change,” added Golding.

He charged that despite the claim by the Government about no new taxes over the past several fiscal years, the taxes being collected from the Jamaican people have risen dramatically under this Government.

“Tax collected is now over 28 per cent of GDP (Gross Domestic Product). Jamaicans are taxed much more under this JLP Government. Over the four financial years 2021/22 through 2024/25, tax collections have increased by $419 billion… That is an increase of 66 per cent, which is way more — in fact, more than double — the accumulated inflation of 31 per cent over that four-year period,” said Golding.