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Published: Tuesday | December 16, 2008
Sabrina Gordon, Staff Reporter
The Government is projected to lose some $862 million in revenues for the remainder of the fiscal year as a result of the massive relief package announced by Prime Minister Bruce Golding on Sunday.
The biggest cut comes from the tourism sector, whose revenues are expected to plunge by $432 million for the last quarter of the fiscal year with the 50 per cent reduction in the 8.25 per cent tax levied on the tourism sector.
The reduction in transfer tax, from six to five per cent, will result in the loss of $170 million in revenues, while the removal of the custom user fee will further depress revenues by $114 million.
A Christmas duty relief will further lower revenue projections by $84 million and the the increase in the GCT threshold for businesses will take away another $40 million. Effective January 1, only businesses earning more than $3 million annually will be required to pay the tax. The Government is also relaxing duty charges on shipments with personal effects valued up to US$3,000 (J$237,000) to provide relief for families receiving items from relatives abroad for the holidays.
A mere $10 million
A finance ministry release issued yesterday evening stated that most of the cost associated with the elimination of the tax on dividend for all locally owned companies was already factored into the Budget, hence the cut will cost a mere $10 million.
Likewise, the cost related to the increase in the income-tax threshold to $220,272 was already taken into consideration. Golding, in a bid to ease the strain on the working class, announced that the income tax threshold would be moved up, meaning that all earnings up to this amount would be free from taxation.
The cost of moving the band allowed for capital equipment depreciation from two years to one is not expected to be more than $13 million.
These incentives were part of a stimulus package announced by the prime minister on Sunday to rescue the ailing economy and provide a cushion for the fallout from the global financial economic meltdown.
However, there is at least one economist who believes that the stimulus package would impact negatively on the country's fiscal accounts.
"This moves us backward. Two of our biggest problems are high cost of capital and the number of waivers and remissions in the system; the prime minister's announcement has made both problems worse," said Damien King, economist and lecturer at the University of the West Indies, Mona.
"This stands to worsen the deficit, increase borrowing from the domestic market and now necessitate an increase in interest rate," he emphasised.
The Opposition yesterday said Golding's silence on the implications of the relief plan on the Budget would erode investor confidence.
"The details of the stimulus package announced by the prime minister raise several disturbing questions about the fiscal accounts, which the latest data released by the Government itself show to be badly off-track," the Opposition said.
sabrina.gordon@gleanerjm.com
http://www.jamaica-gleaner.com/glean...ead/lead5.html
Sabrina Gordon, Staff Reporter
The Government is projected to lose some $862 million in revenues for the remainder of the fiscal year as a result of the massive relief package announced by Prime Minister Bruce Golding on Sunday.
The biggest cut comes from the tourism sector, whose revenues are expected to plunge by $432 million for the last quarter of the fiscal year with the 50 per cent reduction in the 8.25 per cent tax levied on the tourism sector.
The reduction in transfer tax, from six to five per cent, will result in the loss of $170 million in revenues, while the removal of the custom user fee will further depress revenues by $114 million.
A Christmas duty relief will further lower revenue projections by $84 million and the the increase in the GCT threshold for businesses will take away another $40 million. Effective January 1, only businesses earning more than $3 million annually will be required to pay the tax. The Government is also relaxing duty charges on shipments with personal effects valued up to US$3,000 (J$237,000) to provide relief for families receiving items from relatives abroad for the holidays.
A mere $10 million
A finance ministry release issued yesterday evening stated that most of the cost associated with the elimination of the tax on dividend for all locally owned companies was already factored into the Budget, hence the cut will cost a mere $10 million.
Likewise, the cost related to the increase in the income-tax threshold to $220,272 was already taken into consideration. Golding, in a bid to ease the strain on the working class, announced that the income tax threshold would be moved up, meaning that all earnings up to this amount would be free from taxation.
The cost of moving the band allowed for capital equipment depreciation from two years to one is not expected to be more than $13 million.
These incentives were part of a stimulus package announced by the prime minister on Sunday to rescue the ailing economy and provide a cushion for the fallout from the global financial economic meltdown.
However, there is at least one economist who believes that the stimulus package would impact negatively on the country's fiscal accounts.
"This moves us backward. Two of our biggest problems are high cost of capital and the number of waivers and remissions in the system; the prime minister's announcement has made both problems worse," said Damien King, economist and lecturer at the University of the West Indies, Mona.
"This stands to worsen the deficit, increase borrowing from the domestic market and now necessitate an increase in interest rate," he emphasised.
The Opposition yesterday said Golding's silence on the implications of the relief plan on the Budget would erode investor confidence.
"The details of the stimulus package announced by the prime minister raise several disturbing questions about the fiscal accounts, which the latest data released by the Government itself show to be badly off-track," the Opposition said.
sabrina.gordon@gleanerjm.com
http://www.jamaica-gleaner.com/glean...ead/lead5.html
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