Clarke tells how Gov't will help workers, small businessesWednesday, March 25, 2020
BY ALICIA DUNKLEY- WILLIS
Finance Minister Dr Nigel Clarke yesterday outlined the Government's financial bailout package for thousands of Jamaican workers and small operators in tourism and related sectors who have taken a hit by a downturn in activities because of the COVID-19 pandemic.
The measures, amounting to billions in Government spend, are part of the Administration's fiscal stimulus package, the minister said.
Clarke, in closing the 2020/21 Budget Debate at Gordon House in downtown Kingston, said under the Administration's COVID-19 Allocation of Resources for Employees (CARE) programme thousands of waiters, waitresses, bartenders, gardeners, room attendants, drivers, caregivers, security guards, office attendants, and clerks, among other categories of workers who are the backbone of the hotel, attraction, tour, and restaurant industries, will receive assistance.
“It is a time when those who play by the rules, who are registered, will be rewarded,” said Clarke, who had first revealed the Government's intention in an address to the nation last Thursday.
Government will be providing temporary grants for laid-off or terminated employees whose taxable income is $1.5 million or less, under an initiative dubbed Supporting Employees with Transfer of Cash (SET Cash).
The finance minister said the temporary cash transfers will be made to individuals where it can be verified that they lost their employment since March 10 (the date of the first COVID case in Jamaica).
“This programme will be available to employees from any sector who lost their employment after March 10 and before June 30. Employees will be required to apply by filling out an application online. It will be necessary to verify that the applicant was indeed employed prior to March 10. This verification will be achieved by verifying that at some point in the last three months, statutory deductions were filed on behalf of the employee. It will also be important to verify that the applicant was actually laid off,” Clarke explained.
He said positive verification will be achieved by having the employer fill out and upload a P45 form on which the identity of all laid off or terminated employees is provided.
“Once there is a match between the applicant data and the data on a P45 form, that second stage of the verification would have been completed. Once the applicant is verified, the file will be passed to the accountant general and payment made electronically directly to the bank account of the applicant,” the minister said.
Applicants who are successful will receive payment at the rate of $9,000 per fortnight, paid monthly from the month of application until June, provided that the application is made before the cut-off point for that month.
Under the Government's Business Employee Support and Transfer of Cash (BEST Cash) programme, Clarke explained that for tourism businesses to qualify they will need to by fill out the required form online, then file and pay their payroll returns as usual “on the 15th of April, May and June”.
“For each employee with taxable income that is less than $1.5 million on whose behalf statutory returns are applied, the Government will transfer funds at a rate of $9,000 per fortnight to that tourism-related business, by direct transfer to their bank account, paid monthly. For the months of April, May and June that will equate to $54,000 for each employee they retain whose taxable income is less than $1.5 million”.
Noting that Jamaica has never had such a direct transfer programme, the finance minister said a multi-disciplinary team from the Ministry of Finance, the Accountant General's Department, Tax Administration Jamaica, and eGOV Jamaica Limited is designing the online interface processes and protocols.
“We are working so that businesses can begin to apply by April 9, assuming that the supplementary [budget] is passed by then,” Clarke told the House.
In the meantime, an amount of $1.1 billion in grants will be provided under the Programme of Advancement Through Health and Education (PATH) to support the poor and vulnerable with a payment that effectively increases what they would otherwise receive in the period April – June, the finance minister said.
“PATH beneficiaries will ordinarily receive a payment in April and a similar payment in June. [But] in response to the economic effects of the COVID-19 pandemic, the Government will make an additional payment of a similar amount in May, which will have the effect of increasing, by 50 per cent, the aggregate amount that PATH beneficiaries would have ordinarily received during this period of April - June. So, the amount received per payment remains the same, but the frequency will increase over this period. Instead of two payments, there will be three, which means the aggregate amount increases by 50 per cent,” the finance minister explained.
Additionally, all small businesses with sales of $50 million or less, and which filed taxes in the 2019/20 financial year, and filed payroll returns indicating they have employees, will be eligible for a one-time COVID small business grant of $100,000, Clarke announced.
“They will be required to fill out a form online, providing their banking information. The process will involve verification of a submitted tax return for 2019/20 as well as the submission of the relevant payroll returns relating to employees the small business may have. This measure is expected to cost $800 million,” he told the House.
Meanwhile, small operators in tourism and related sectors are to benefit from $1.2 billion in grants.
Clarke said the finance ministry, in consultation with the Jamaica Hotel and Tourist Association, will establish the maximum grant that any one business can receive, among other criteria.
“These grants will be accessible by application to a special multi-stakeholder COVID Tourism Grant Committee and by submitting detailed information, including audited financials and management accounts, projected cash flow statement along with assumptions, recovery plan with other steps being taken, statement of personal assets and liabilities, and evidence of tax compliance among other criteria agreed in consultation with stakeholders,” Clarke outlined.
He said grants will, however, not be available to all operators and priority will be given to tourism-related businesses below a threshold size to be determined, which can demonstrate the existence of a viable recovery plan that incorporates resources from other sources.
Clarke also said the Government will be reallocating expenditure to finance a further $200 million in COVID Compassionate Grants from the Constituency Development Fund to be distributed through constituency offices, and $150 million in support to the Ministry of Local Government to attend to the needs of the elderly, the infirmed and the homeless who are not on PATH, as well as $200 million to support small farmers.
In addition, the Administration will be deferring the principal and interest payments on student loans for the three month period April – June to cushion the impact on young graduates while giving new graduates 14 months to start repaying their student loans after graduation.