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Consolidation of statutory deductions will benefit taxpayers - Davies
Minister of Finance Omar Davies has defended the government's proposal to consolidate statutory deductions, saying that a reform would reduce the financial burden on individual taxpayers while lowering the cost of remitting the deductions to the relevant agencies.
Dr Davies made this proclamation yesterday at a Jamaica Employers Federation (JEF) forum for business leaders on the proposed consolidation of statutory deductions, held at the Pegasus Hotel.
"The current system is too tedious administratively," said Dr Davies. "However, consolidation also gives the government an opportunity to simultaneously address various secondary objectives in the education and health sectors as it gives the government an additional degree of freedom in the budgetary process."
Government has proposed the consolidation of the National Insurance Scheme (NIS), National Housing Trust (NHT) and Education Tax into one deduction from salaries. The proposal also includes the Human Employment and Resource Training (HEART) employer deduction.
"The reform proposes a more efficient system that is intended to be of mutual benefit to the government and all categories of taxpayers," said Davies.
Davies told the business leaders that the proposed single payroll contribution eliminated all four contributions as well as the NIS income cap of J$500,000, adding that each contribution developed its own administrative mechanism with little or no co-ordination with the others.
"This flat rate will be calculated on gross emoluments and not exceed the current gross rate of 18 per cent (11.5 per cent employer and 6.5 per cent employee). The gross deduction will then be divided among the HEART Trust/NTA, NIS, NHT, the Consolidated Fund and possibly an Education Transformation Fund, according to the agreed upon fixed rate," explained Dr Davies.
He added that as a result the Education tax would be abolished and a dedicated revenue stream for the capital needs of the education sector created instead.
According to the finance minister, the proposed reform seeks to achieve the objectives of reducing the financial burden on individual taxpayers, a reduction in the various costs associated with remitting these monies to the tax authorities, and a reallocation of the proceeds to target, in particular, the education and health sectors.
Collection of the funds, Dr Davies said, would be done either through a newly formed agency or a restructured Inland Revenue Department (IRD), which would have the responsibility of remitting the taxes to the beneficiary agencies.
He added that all the relevant laws and regulations will have to be reviewed and the appropriate amendments put in place to ensure uniformity of deductions across the board and that revenue streams to the relevant agencies met the agencies, projected needs over the medium term.
Minister of Finance Omar Davies has defended the government's proposal to consolidate statutory deductions, saying that a reform would reduce the financial burden on individual taxpayers while lowering the cost of remitting the deductions to the relevant agencies.
Dr Davies made this proclamation yesterday at a Jamaica Employers Federation (JEF) forum for business leaders on the proposed consolidation of statutory deductions, held at the Pegasus Hotel.
"The current system is too tedious administratively," said Dr Davies. "However, consolidation also gives the government an opportunity to simultaneously address various secondary objectives in the education and health sectors as it gives the government an additional degree of freedom in the budgetary process."
Government has proposed the consolidation of the National Insurance Scheme (NIS), National Housing Trust (NHT) and Education Tax into one deduction from salaries. The proposal also includes the Human Employment and Resource Training (HEART) employer deduction.
"The reform proposes a more efficient system that is intended to be of mutual benefit to the government and all categories of taxpayers," said Davies.
Davies told the business leaders that the proposed single payroll contribution eliminated all four contributions as well as the NIS income cap of J$500,000, adding that each contribution developed its own administrative mechanism with little or no co-ordination with the others.
"This flat rate will be calculated on gross emoluments and not exceed the current gross rate of 18 per cent (11.5 per cent employer and 6.5 per cent employee). The gross deduction will then be divided among the HEART Trust/NTA, NIS, NHT, the Consolidated Fund and possibly an Education Transformation Fund, according to the agreed upon fixed rate," explained Dr Davies.
He added that as a result the Education tax would be abolished and a dedicated revenue stream for the capital needs of the education sector created instead.
According to the finance minister, the proposed reform seeks to achieve the objectives of reducing the financial burden on individual taxpayers, a reduction in the various costs associated with remitting these monies to the tax authorities, and a reallocation of the proceeds to target, in particular, the education and health sectors.
Collection of the funds, Dr Davies said, would be done either through a newly formed agency or a restructured Inland Revenue Department (IRD), which would have the responsibility of remitting the taxes to the beneficiary agencies.
He added that all the relevant laws and regulations will have to be reviewed and the appropriate amendments put in place to ensure uniformity of deductions across the board and that revenue streams to the relevant agencies met the agencies, projected needs over the medium term.
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