Jamaica’s Finance Minister Nigel Clarke has reiterated the government’s commitment to abolishing the asset tax, but said the pandemic has led to a revision in the timeline.
Clarke, speaking at the Mayberry Investments virtual forum, explained that due to the COVID-19 pandemic, the country did not, at this time, have the fiscal space to reduce the tax that he’s deemed “not sensible”.
He used the occasion to remind Jamaicans that the government had announced a reduction in the asset tax, as part of a tax cut exercise during last year’s budget debate.
“The Government of Jamaica is of the firm view that tax needs to go as soon as we can find the space.”– Minister of Finance Nigel Clarke
“You would recall in the last budget we slashed the asset tax payable by banks by 50% and then the pandemic hit. And as a part of our response, in the first supplementary, with the support of the financial community we clawed it back, the cost of it was about $3 billion and we repurposed those funds. And that was absolutely necessary,” Clarke said.
“But by passing a budget that contemplated a reduction in the asset tax by 50% I think it is very clear where the government’s policy intent is. I’ve said and I am on record as saying that the asset tax for financial purposes is not a sensible tax,” added Clarke.
Clarke further reiterated the government’s position that the tax is counterproductive to growth.
“It has the impact of increasing the cost of capital to business and to individuals and therefore it works against the public interest. In order to reduce we have to have the fiscal space, and time will tell when we can have that fiscal space in order to reduce it,” said Clarke.
“The Government of Jamaica is of the firm view that tax needs to go as soon as we can find the space. And not for the benefit of financial institutions and their bottom line at all but for the benefits of their consumers and customers because ultimately financial institutions – banks and insurance companies and broker dealers – they just pass it on to you, the consumer,” added Clarke.