MINISTER of Finance and the Public Service Audley Shaw will today outline how he plans to finance the $580-billion budget and meet Government’s commitment to reduce personal income tax when he opens the 2016/17 budget debate at Gordon House.
After weeks of speculation, Jamaicans are expected to be glued to their radio and television sets to hear the minister unscramble the logistics of increasing the personal income tax threshold to as much as $1.5 million per annum, while ensuring that the budget stays on course to meet the seven per cent primary surplus target under the Extended Fund Facility (EFF) agreement with the International Monetary Fund (IMF) for 2016/17.
An extremely confident Shaw quipped yesterday that he still stands by the response he gave the press outside Gordon House on April 14, when he tabled the 2016/17 Estimates of Expenditure, that “everybody will be happy” with the Government’s plan for implementing the personal income tax relief.
Shaw would not comment on speculation in the broadcast media yesterday about how the plan would be implemented, but encouraged the public to listen to his opening presentation today for those details.
He proffered that his speech would not be long, but would be “growth-oriented”.
“The whole idea of the presentation is to support growth. It’s a growth-oriented speech and it is not going to be very long and it will deal with the (income) tax relief plan,” he told the Jamaica Observer.
Jamaican workers have been waiting with bated breath since the February 25 General Election for the details of how the Government plans to implement its campaign promise to increase the income tax threshold to $1.5 million per annum, as part of its 10-point growth plan.
There is also expected to be high interest in how far the Government intends to go this fiscal year, in terms reforming the tax system — which was one of the items in its 10-point plan that highlighted its successful campaign to unseat the previous People’s National Party Government in the general election.
Richard Byles, co-chair of the economic oversight committee which has been monitoring the administration of the government’s Economic Reform Programme under the IMF agreement, has expressed concerns about the possible effect of increasing the income tax threshold on the primary surplus target.
However, financial analyst and CEO of the Private Sector Organisation of Jamaica (PSOJ) Dennis Chung told the
Observer yesterday that, if speculation that implementation will be in two phases are true, it would be a welcome move as it has already been publicly recommended by the PSOJ.
“We didn’t see how it could be accommodated in one go given the fiscal obligations,” Chung remarked.
Shaw yesterday reiterated the position that the proposal is commensurate with the Government’s appeal for a “partnership for prosperity” which, he said, will require workers who benefit from the relief to plough back some of the excess funds into the economy to stimulate growth.
The income tax relief was listed in the Jamaica Labour Party’s election manifesto’s “map to prosperity”, which also proposed the creation of a Ministry of Economic Growth and Job Creation, and the creation of a special council of investment ambassadors, both of which have already been structured.
There is also expected to be high interest in how far the Government will go, after less than three months in power, to implement other aspects of its election manifesto, including increasing employment, reducing the debt burden of students, focusing on the development of small and medium enterprises, as well as reforming the tax system by reducing transfer taxes, stamp duties and estate taxes.