Experts say budget fair

[Sir X]

Experts say budget fair

BY JULIAN RICHARDSON Assistant business co-ordinator richardsonj@jamaicaobserver.com
Friday, May 25, 2012

FINANCIAL sector experts praised the Government's revenue measures yesterday for striking a fair balance in addressing the need for economic growth without burdening livelihoods.

"It was an excellent Budget," said financial analyst Dennis Chung. "It is not only looking at the debt and the fiscal, it looks very importantly at putting money in the hands of those who have the highest propensity to spend, which is a way of stimulating the economy."



WALDRON-GOODEN... thinks the market will respond positively (Photo: Bryan Cummings)

Finance Minister Dr Peter Phillips presented new measures to raise $24 billion in additional taxes this fiscal year. Among the proposals that will ease the burden on consumers are a one percentage point reduction in GCT to 16.5 per cent, a 15 per cent increase in the income tax threshold to $505,312, and the threshold on GCT on electricity being moved from 200 kilowatt hours to 300 kilowatt hours.

On the other hand, the Government has widened the GCT base, curtailed discretionary waivers and implemented a five per cent tax on dividends payable to residents, among other measures to lure additional revenues.

Tania Waldron-Gooden, Mayberry Investment's vice-president for research and special projects, said the tax on dividends was symbolic of the Government's overall handling of the Budget.

"That is one thing that pointed out to me that they are trying to hit at all levels," Waldron-Gooden said. "At one point, that idea (about taxing dividends) was floating around and no one did anything about it. That was a forward move by this Government."

Waldron-Gooden admitted that some set of businesses will feel a pinch because of the new measures, particularly the hotel sector, which has been subjected to a modification in its GCT system which will result in accommodation costs going up. However, she said, sacrifices had to be made.

"We are in a time where we have to make up our minds as a country what we are willing to do to sustain growth," she said. "It is a tough Budget; We are in tough times. All of us have to contribute, and I think this Budget tried to achieve that."

She suggested that the new measures may get a favourable response from investors who probably view them as better than expected. "On average, I think the market will respond positively to this Budget because a lot of persons were expecting gloom and doom."

Tax expert Allison Peart agreed that the Budget was not as painful as people expected.
"Considering the state of our finances, this could have been a lot more draconian," said Peart, managing partner at Ernst & Young. "It was a balancing act. They were trying to make sure they raised the funds without punishing the poor."

The tax specialist lauded the Government for what she said was a start on tax reform. "It is a step in the right direction."

Read more: http://www.jamaicaobserver.com/news/...#ixzz1vsmuIzfb

[Sir X]

Shaw says taxes will hit small businesses

... increased GCT on electricity deceptive
BY BALFORD HENRY Observer senior reporter balfordh@jamaicaobserver.com
Friday, May 25, 2012

OPPOSITION Spokesman on Finance, Planning, Growth and Economic Development, Audley Shaw says that the revenue measures announced by Government yesterday will hit small businesses and cancel out any reduction in telephone rates expected from recent telecommunications policy changes.

“I think that the small business people will take a hit,” Shaw said in a quick response to the measures, shortly after they were tabled at Gordon House by Finance and Planning Minister Dr Peter Phillips.





He said that the decision to increase the threshold on electricity to 300 kilowatt hours for residential users, while increasing the rate to the new standard General Consumption Tax (GCT) rate of 16.5 per cent, was an “act of deception”.

“They said they were going to eliminate the 10 per cent tax on electricity but, instead, they increased the threshold, then increased the tax to 16.5 per cent. It is an act of deception and small businesses are going to get hit because it is going to drive up their costs,” Shaw warned.

He said that small businesses would also be hurt by the readjustment in the termination fee structure for telephone calls, as it relates to mobile-to-mobile and mobile-to-land termination.

“The public will not benefit; small business people [who] will take a hit again, and it is obvious that they are introducing these rates to take back the reductions in telephone rates which the public is expecting from the recent amendments to the Telecommunications Act,” Shaw insisted.

The former finance minister said that he will be addressing these and other issues when he responds to Dr Phillips on Tuesday when the debate resumes in Parliament.

Phillips announced yesterday that the 10 per cent GCT on electricity, with a threshold of 200 kilowatt hours for residential customers, will be increased to the standard new GCT rate of 16.5 per cent. This will affect 52,000 residential customers at the high consumption levels. Although the number is 80,000 less than the previous figure, it will mean much higher bills for those who remain on the list. The move will earn the Government $430 million this year.

The minister also stated that, in keeping with equity and to ensure compliance with trading partners, there is to be a readjustment in the termination fee relating to mobilemobile and mobile-land termination telephone calls. With the reduction of the fee by the Office of Utilities Regulation, the Government plans to introduce a 30-cents-per-minute increase on all domestic calls, which terminate with a mobile network and fixed lines, and a US 75-cents-perminute increase on all international calls for termination to the mobile network. This is expected to earn $5.2 billion in revenue.

Read more: http://www.jamaicaobserver.com/news/...#ixzz1vsu3KpNP

[Sir X]

Tax measures pose tougher environment for businesses

Friday, May 25, 2012

IN trying to make the move towards a more efficient general consumption tax (GCT) system less painful, the Government may have created a tougher environment for businesses.

Instead of applying the sales tax to all goods and services and drastically lowering the rate in one sweeping move, Finance Minister Peter Phillips shaved the rate by one percentage point, applied the new rate to electricity and tweaked taxes on hotel rooms that may squeeze the tourism sector.

“The feedback from the industry is that they are extremely alarmed at the structure and level of tax rates,” said Jamaica Hotel and Tourist Association President Evelyn Smith. “They are expecting tourism to contribute a lot.”

She expressed concern over the potential impact that the room tax of US$2 to US$12 per night (depending on the size of the hotel) will have on the viability of the sector, while questioning whether the tax would be applicable to complimentary rooms. Those are needed to promote the products to agents and tour operators who in turn help sell the rooms.

Even though GCT-registered operators can recover the tax paid for input items from the tax they collect from sales, it may not hold true all the time for a sector that goes through major cycles.

“It is a cash flow issue,” said Smith. “In the down months, GCT on electricity may not be recoverable through sales.”

Phillips raised the tax-free threshold from 200 kilowatt hours to 300 kWh for residential customers, but at the same time increased the rate applied to taxable electricity from 10 per cent to 16.5 per cent.

Brian Denning, a tax expert and member of the Private Sector Working Group on tax reform, said he believes that the measures are a step in the right direction. It would have been difficult to implement a more comprehensive tax reform package at this time, given the need to finance a six per cent primary surplus.

But he pointed out that the Government could have acquired more fiscal space by simply avoiding the cost of passing on savings to highincome earners when the income threshold is increased. An income exemption limit would remove the burden of PAYE on low-income earners but would not give the tax-free benefit to high earners.

He suggested that producers of GCT-exempt items might have to absorb more taxes on their inputs as a result of a limited widening of the net.

In other words, adding some items to the tax list that would be purchased by such a producer could not be recoverable because the goods he produces are still not on the list. Similarly, the higher GCT on electricity would have to be absorbed.

“We are going to look at it more closely,” said Denning, “particularly as it relates to items that remain exempt”.

The minimum income tax on businesses is a concern for MSME Alliance head Professor Rosalea Hamilton.

“It is not clear if businesses which earn below the tax threshold or ones that are losing money will have to pay,” she said.

Aside from tax measures, Phillips spoke to ways to help the sector, such as a $1-billion loan facility to MSMEs through the Development Bank of Jamaica.

“The disappointment comes from not seeing anything more than the usual,” said Hamilton.

She argued that the focus of the announcements yesterday, as in the past, was on growing the size of businesses rather than growth of entrepreneurship and competitiveness.

“There was no mention of the MSME and Entrepreneurship Policy, after a year of discussion,” she said.
Read more: http://www.jamaicaobserver.com/news/...#ixzz1vsv2xTTg

[Sir X]

Jamaica can't afford a stimulus budget — Phillips

BY ALICIA DUNKLEY Observer senior reporter dunkleya@jamaicaobserver.com
Friday, May 25, 2012

FINANCE Minister Dr Peter Phillips yesterday dismissed calls for a stimulus budget saying it was enticing, but unrealistic.

Making the opening presentation during the 2012/13 Budget Debates at Gordon House in downtown Kingston, Dr Phillips said he felt "compelled to address the question as to whether there is a choice between an austerity budget and a stimulus budget".

"According to this line of argument, the current budget is too tight and we should be engaging in more expenditure, especially on the capital side of the budget in order to grow our way out of our present predicament. Quite frankly, I empathise with those calling for more expenditure. Who would not want to answer the call to spend more? I certainly would. But seductive as the thought is, it is a mirage," Dr Phillips said.

The finance minister said the call could well be taken up but for the fact that international financial institutions are not prepared to lend the country more based on its current debt condition.

"In these terms, stimulus means engaging in higher deficit expenditure. That is just another term for borrowing more in order to engage in greater capital expenditure. That would indeed be a welcome prospect were our debt ratios lower than they in fact are. The fact is that we can only borrow more if someone is prepared to lend to us in sufficient amounts. It is a matter of record that the international financial institutions are not prepared so to do," he said.

Moreover, the finance minister said that if the country were to approach the domestic capital markets to finance sizeable deficit expenditure, it would be at the cost of a reversal of the downward path of domestic interest rates.

"This administration is not prepared to undertake these actions. Contrary to the doubters and the naysayers, this Administration is committed to doing all in our power to sustain the downward path on interest rates," he told the Parliament.

"To set interest rate on an upward trajectory once again by deliberate Government policy action would be self-defeating and reduce the country's capacity to achieve the increased rates of economic growth which we all seek," Dr Phillips pointed out further.

He said the administration will be putting in place a more effective oversight as an integral part of an improved debt management framework which will involve a Public Debt Management Bill which will be placed on the parliamentary legislative agenda.

"The objective is to strengthen the existing governance framework by pulling together the numerous debt laws; defining clear debt management objectives and reporting requirements," the finance minister said.


Read more: http://www.jamaicaobserver.com/news/...#ixzz1vswISN1d

[Sir X]

The PNP did what the JLP could not do according to the business community, tackle the IMF and present a realistic budget.

I guess the G2K will argue the PNP are back to mashing up the economy, but the question that will be asked , why didnt you address it when in power.

You have reinforced the stereotype that labourites are mouth pieces that bawl down , rather than build up , to aspire for power and offer nothing tangible but lipservice ,which when found out to the massses, its worse than what they had before.

Incidentally Jamaicans hate people who talk too much(chat faught),labourites are included in that two, hence the landsided outster this past election, it basically explains why they cant live with themselves as a unified party.

[Muadib]

so is who bring up Bitter Pill ? and who was babbling bout JEEP ?

lol ! woiie !

[Sir X]

Action speak louder than words.Experts say budget is fair.Oucccch!

[Lazie]

The PNP did what the JLP could not do according to the business community, tackle the IMF and present a realistic budget.

I guess the G2K will argue the PNP are back to mashing up the economy, but the question that will be asked , why didnt you address it when in power.

You have reinforced the stereotype that labourites are mouth pieces that bawl down , rather than build up , to aspire for power and offer nothing tangible but lipservice ,which when found out to the massses, its worse than what they had before.

Incidentally Jamaicans hate people who talk too much(chat faught),labourites are included in that two, hence the landsided outster this past election, it basically explains why they cant live with themselves as a unified party.

I see people are busy trying to rewrite history. I recall Shaw presenting a budget to share the burden and everybody got upset ... even those applauding the presentation in Parliament yesterday.

The question should be asked if people had put politics aside and taken an objective look at the situation the country was in instead of focusing on being a nightmare ... how much more revenue would have been collected todate?

Instead due to the backlash then ... the wicked and uncaring gov't had to reverse the ting. Now the compassionate and loving gov't is administering the same medicine .. at least people can now accept it with a smile.

[Muadib]

suh wait.. is when Budget mek ?

lol !

But PNP action nevah match dem words.. dat is called deception !

lol ! woiee!

Fair ? wha dat mean ?

Experts.. heh, heh.. yuh mean like 'Political Analysts' ?

lol ! tek time X.. debate juss start...

[Sir X]

LOL....aaahhhhh bwoooyyy..wha yuh say di bizniz class was against the JLP?I thought they valued them over the socialist PNP...lol

[Bricktop]

Instead of going hard after tax dodgers they increase the tax net...makes sense to me...

[Lazie]

LOL....aaahhhhh bwoooyyy..wha yuh say di bizniz class was against the JLP?I thought they valued them over the socialist PNP...lol

This is the problem trying to have a discussion with you, be it current affairs or football. You never stay on topic and secondly you try to argue without knowing the facts.

Now, where did I say anything as you implied in your previous post?

[Sir X]

My favourire labourites.

http://www.youtube.com/watch?v=TIbWs74QsJU

http://www.youtube.com/watch?v=rpWeQ...feature=relmfu

http://www.youtube.com/watch?v=8tJRDjpdKj0

http://www.youtube.com/watch?v=0lwvo...eature=related

[Muadib]

let it out comrade.. yuh can stap pretend now..

[Sir X]

Your problem is you use vague terms like (PEOPLE) expecting the reader to understanding whom or what you mean by people , is it rich , poor, middle class , business etc , so when interpted by the reader as to how they choose , you grandstand as if you can defend your point.

You cant, the terms you use are too broad.Learn to present your ((facts)) another one ((Sass)) better.