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Gov’t of Jamaica announces tax cut of $18B

In his three and half-hour budget presentation to the Lower House yesterday, Jamaica’s Minister of Finance and Public Service Dr Nigel Clarke announced tax cuts that would amount to JM$18 billion.

Chief among the reductions the finance minister announced was a 1.5 per cent reduction in the general consumption tax (GCT) to 15 per cent.

Jamaica’s Minister of Finance and the Public Service Dr Nigel Clarke (Photo: JIS)

“This year, Mr Speaker, in addition to looking to stimulate growth by boosting investment…we’ll also be seeking to boost consumption. Mr Speaker, effective April 1, 2020, the standard rate of GCT will be reduced by 1½ per cent,” Dr Clarke stated at Gordon House in Kingston.

“This is the first cut in the GCT rate that was not accompanied by GCT being applied to other areas,” the minister boasted.

He explained further that though the measure will result in revenue loss of approximately JM$14 billion, it would create more disposable income in the economy and boost economic activity.

“This year, Mr Speaker, in addition to looking to stimulate growth by boosting investment…we’ll also be seeking to boost consumption.”

Dr Nigel Clarke, minister of finance and the public service, Government of Jamaica

Dr Clarke also announced the reduction of the asset tax by half, moving from 0.25 per cent to 0.125 per cent. With this tax cut, the Government will lose JM$3 billion.

Another measure announced by Clarke: the Government of Jamaica, since January 1, 2020, has granted an income tax credit to micro, small and medium-sized enterprises (MSMEs) earning up to JM$500 million. The credit, which amounts to JM$375,000, is granted to MSMEs that file their tax returns.

He noted, too, that since the Government reduced the distortionary taxes at the start of the current fiscal year, 2020/21, “incorporation of new businesses increased by 95 per cent between March and December 2019”.

The finance minister also highlighted that the Government will reduce the Jamaica Agricultural Commodities Regulatory Authority fee by 50 per cent. Similarly, Trade Board fees, with the exception of motor vehicles, will also be cut by half.