Mahfood: Slashing GCT by 6% would rocket economy
GOVERNMENT’S TAX cuts have been hailed by chief executive officer of Jamaican Teas, John Mahfood, as a good move, but the businessman said yesterday evening that it was inadequate to boost the personal financial well-being of the majority of Jamaicans.
Responding to the latest RJRGLEANER commissioned Don Anderson poll, which found that 53 per cent of Jamaicans have experienced no financial improvement in the past three years, Mahfood suggested that six percentage points be slashed from the current general consumption tax (GCT) rate. The poll indicated that 40 per cent of Jamaicans are seeing brighter financial statuses.
“In an economy that has been growing by only one per cent a year for the past three years and before that, near zero, very few people are going to feel a great benefit to their pocketbooks. Government could take a more aggressive position to stimulate the economy.
“Rebate of some taxes is good, because we are overtaxed, but I believe this isn’t the stimulation route for the majority (of people). The very high GCT of 16.5 per cent is where they should have started, and over the next two years bring it down to 10 per cent. The extra six per cent would mean a lot to poor people because most of their money goes towards basic food, which is heavily impacted by GCT.”
“A reduction would make them spend more, and would reduce the cost of houses. Every house built has a lot of GCT in it. I think that’s where their focus should have been, and not on reducing transfer tax and asset tax, which don’t benefit majority the of Jamaicans.”
The poll indicated that although personal finances have not improved, Jamaicans observed an increase in the number of jobs. Fifty five per cent of respondents believe more jobs have been created, while 35 per cent disagreed.
On the issue of the country’s fluctuating foreign exchange rate, 41 per cent indicated a lack of confidence in the Bank of Jamaica’s (BOJ) ability to manage the situation while 33 per cent gave the bank the thumbs up in managing the currency rate.
Responding to this issue, Mahfood said, “One doesn’t like to see the fluctuation by such a large margin. It’s not good for business. However, in the past six years we have experienced reasonably stable foreign exchange rates. I believe it has been reasonably managed by the BOJ. It would be great, though, if we could get a better understanding from them as to why we have these major fluctuations. If people understood, it would help with better planning,” Mahfood stressed.
The BOJ implemented B-FXITT in 2017 as a tool to manage currency rates and limit volatility.