The Jamaica Chamber of Commerce (JCC) yesterday applauded a number of measures in the 2021-22 budget announced by Finance Minister Dr Nigel Clarke last week Tuesday, but urged the Government to adopt bolder initiatives to generate economic activity and increase gross domestic product (GDP).
Describing Clarke’s presentation as a “comprehensive reform agenda”, the JCC said it approved of the move towards an independent central bank and a fiscal council, the announcement of no new taxes; and the removal of the Custom Administration Fee (CAF) on exports for small transactions below US$500.
“We would like the CAF to be abolished in its entirety, particularly for exports but understand it may not be possible at this time due to revenue considerations,” the JCC said in a news release.
The chamber also applauded the decision to modernise Jamaica’s Income Tax Act, and said it welcomed the Reverse Corporate Inversion Initiative to encourage the return of group headquarters and overseas holding companies to Jamaica, thereby relocating both taxes and high-paying jobs to Jamaica.
“In this context, we believe it is also time to look again at removing the double taxation of dividends that drives some of this activity. Taxation of dividends was reimposed some time ago to meet a revenue goal, and we believe its removal would greatly support the minister’s other very welcome initiatives to make Jamaica the capital market centre for the Caribbean,” the JCC said.
Additionally, the JCC said it found favour with the intention to provide the regulations to activate the currently dormant Income Tax Relief (Large Scale Project & Pioneering Industries) Act.
The JCC said it does not believe there is anything wrong with incentives, once they are rules-based, fair, and encourage activity that would otherwise not take place and form a part of a holistic execution programme with measurable targets, explicit responsibilities, and regular monitoring of results.
“Our experience tells us that, without a programmatic approach, arrived at through a collaborative process between the Government and market, incentives are likely to be ineffective,” the JCC said.
“During this period, it is particularly important to boost exports, diversify the economy, thereby increasing GDP and, by extension, tax revenues. For example, we believe that incentives are necessary for the redevelopment of urban centres like downtown Kingston, and that there are other incentives, such as research and development or green technology, that should be considered,” the chamber argued.
In relation to tax-free tablets and phones, the JCC reiterated its view that bolder steps need to be taken to address the 40 per cent of the school population without an electronic device, and the Government should make these devices tax-free for a minimum of two years.
“This issue goes well beyond schoolchildren to numerous small businesses and sole traders who are having great difficulty in accessing loans and grants,” the JCC said.
The chamber also said it was happy to learn that the COVID-19 inoculation programme is fully financed under the Social and Economic Recovery and Vaccine programme and urged consideration of bolder initiatives, particularly targeted at generating economic activity and increasing GDP.
“For example, several countries have provided significant funding to stimulate the restart of small business and key industries. While we welcome the minister’s equity finance proposal, we believe the damage to small business and key industries is much greater than the financing currently being considered. In this regard, we suggest that the social dialogue process may be used to identify segments of the society that urgently need more aid than was outlined in the budget,” the JCC said.