JAMAICA risks weakening its post-hurricane recovery if it relies mainly on new taxes to close its fiscal gap, PwC said in its review of the 2026/27 budget, urging the Government to widen compliance and attract investment after Hurricane Melissa caused an estimated US$8.8 billion in damage in October 2025.

The Government has proposed a new levy on sugary drinks and foreign digital services, while increasing excise duties on alcohol and tobacco, with the measures set to take effect during the 2026/27 fiscal year — the first tax package in almost a decade.

Once implemented, the new and increased taxes are expected to generate about $18 billion in 2026/27, with a further $11.4 billion coming from the National Housing Trust, bringing the total fiscal impact to roughly $29 billion.

But PwC warned that rate increases alone will not deliver sustained fiscal repair. “Funding all of the fiscal shortfall with additional borrowings would be unwise,” the firm said, adding that fiscal prudence remains essential even with the suspension of fiscal rules in the wake of the disaster.

Beyond the new levies, PwC emphasised enforcement rather than further expansion of statutory rates. The firm called for electronic tax receipts and stronger integration of government data systems to capture more activity within the informal economy, arguing that revenue resilience depends on ensuring that “everyone bears their fair share rather than the burden falling on those who meet the moment and pay their taxes”.

It also proposed a voluntary structured tax settlement programme to allow delinquent taxpayers to regularise outstanding obligations — a measure that could generate immediate inflows while strengthening future compliance. Economists have long argued that compliance gaps in Jamaica’s informal economy represent a significant untapped revenue source, though the review did not quantify potential gains.

The review also flagged potential competitiveness risks tied to the planned increase in General Consumption Tax on tourism services from 10 per cent to 15 per cent, beginning in April 2027. “The key question to be asked is whether increasing the GCT rate from 10 per cent to 15 per cent will impair the competitiveness of Jamaica’s tourism product relative to its principal competitor destinations,” PwC said.

Tourism is a key foreign exchange earner and employer in Jamaica. While the sector has export characteristics, consumption takes place locally, making it subject to domestic consumption tax. PwC said any increase should be assessed against the full mix of levies faced by visitors — including room taxes, travel taxes and embedded costs — to avoid unintended pressure on demand during reconstruction.

In addition to compliance reform, PwC revived the Government’s previously signalled Bring Business Back Home initiative, aimed at encouraging businesses and assets structured overseas to relocate activity and investment to Jamaica. “Where designed and implemented properly, this could bring in fresh economic activity that is currently taking place outside of Jamaica,” the review said.

Such a move, the firm suggested, could expand taxable activity without increasing statutory rates and might even create scope to abolish the Assets Tax, which it described as acting “as a deterrent to bring and hold assets in Jamaica”.

The firm also questioned the continued annual transfer of $11.4 billion from the National Housing Trust to central government, warning that sustained drawdowns could weaken the agency’s housing mandate at a time of heightened reconstruction demand. “Given the urgent need for affordable housing solutions … it is important that GOJ does not continually ‘raid di barn’,” PwC said, referring to repeated fiscal transfers from the fund.

With widespread housing damage following the hurricane, the balance between central government financing and housing liquidity may become increasingly delicate.

The 2026/27 budget projects expenditure of roughly $1.44 trillion against revenue of about $1.34 trillion, leaving a gap to be financed partly through borrowing. While additional taxes may be necessary in the short term, PwC acknowledged that “no one likes to pay more taxes”, framing fiscal repair as part of a broader civic responsibility.