... Must be a temporary measure, warns IDB
THE ISSUE of write-offs as a public-driven stimulus to help companies and economies is taking on new life because of the financial fallout from the COVID-19 pandemic.
Donovan Wignall, president of the MSME Alliance, said his more than 300,000 entities “absolutely” need the write-offs.
“The revenues of businesses have really been shot,” he said.
“People’s ability to live up to their financial obligations has been severely impaired. Taxes represent a significant commitment on businesses, and one of the ways the Government could help alleviate some of the current stresses that small businesses have is to give some kind of tax write-offs,” he continued, adding that there are ongoing discussions with the finance minister.
“The Government does have its obligations and they have done creditably during this period by providing some relief to businesses, but they can go a little further in assisting,” Wignall said.
While not definitively saying Jamaica should go that route, the Inter-American Development Bank, one of country’s key financial partners, said helping companies survive the pandemic shock “is crucially important, [especially] for a country as reliant on corporates and SMEs for output and employment”.
But, the bank’s country representative to Jamaica, Therese Turner-Jones, said such actions should be temporary to protect economic reform gains.
“The most important priority is to make sure interventions are targeted at the sectors and entities that need it most time-bound, and well defined. Similarly, they should be structured to provide nearterm cash-flow relief, which will be most beneficial to companies trying to remain in operation through the crisis.”
Turner-Jones said: “When the economy recovers, a vibrant corporate sector must continue to make its fair contribution to Jamaica’s public finances, so that the Government can return to its objective of increasing investment in critical infrastructure, and improving social outcomes in areas such as health, education, public security, water and sanitation, etc.
“This will be crucial to raise productivity, growth, and living standards.”
In May, Clarke told Parliament that the Government was facing a revenue shortfall of $81 billion, a situation compounded by recent projections for the economy to contract by up to 10 per cent.