GOLDING SLAMS $14-B TAX GIVEBACK
Opposition spokesman describes measure as ‘most regressive’ he’s seen
OPPOSITION spokesman on finance Mark Golding yesterday continued his assault on the Government’s $14-billion tax ‘giveback’ package, describing it as “the most regressive tax system in Jamaica, in my living memory”. Golding said that while the indirect taxes on consumption and fuel continue as a load on the backs of the majority, the more economically advantaged were privileged in carrying less and less
of the load.
He also said the tax relief package reflected the same mindset that would run the vendors out of Constant Spring Market, without relocating them to a suitable place to continue business, and paying them only minimal and inadequate compensation for destroying their honest livelihoods.
“We reject that mindset completely,” Golding said while making his contribution to the 2019/20 budget debate at Gordon House. “In his song War, that great son of Trench Town, Bob Marley, quoted His Imperial Majesty Haile Selassie I in pointing out that social peace and harmony cannot exist until there’s no longer first-class and second-class citizens of any nation.”
Golding also quoted Peter Tosh’s “recognition” in his music that there will be no peace without “equal rights and justice”.
“I share that philosophy. That is the fundamental principle from which my presentation is drawn on today,” he told the House.
The Opposition MP, who was responding to Minister of Finance and the Public Service Dr Nigel Clarke’s opening budget presentation last Thursday, which was highlighted by tax measures that will see the Government giving up $14 billion in revenue this fiscal year, pointed out that, while he is a corporate lawyer and investment banker in private, in the House of Representatives he represents the people of St Andrew Southern.
“There is nothing in these tax giveaways for the vast majority of them. They aren’t buying or selling real estate and shares. Many of them will never get a mortgage. And for those who do, it will be a once-in-a-lifetime event,” he said about his constituents.
He added that the same was also true of other inner-city communities in the Corporate Area, including the Prime Minister’s St Andrew West Central constituency and the ruling Jamaica Labour Party’s stronghold of Kingston Western, as well as Portland Eastern, where campaigning is now on for an April 4 parliamentary by-election.
“A giveaway of taxes represents a choice of priorities. This Government has chosen to favour persons who enter into transactions involving secured lending, and the buying and selling of real estate and shares. But why should they be the priority at this time and the principal beneficiaries of the minister’s tax goodies?” Golding asked, eliciting roars of approval and loud support from his colleagues on the Opposition benches.
Commenting on the new General Consumption Tax (GCT) threshold of $10 million, he pointed out that last year the Opposition had called for the increase from $3 million to $10 million to ease the burden on small businesses.
However, he said that he was concerned that some small businesses may suffer from the measure. “Those businesses may wish to be registered for GCT, as without being registered they are unable to charge GCT and use it to recover the GCT they pay on the goods and services they buy for their businesses,” he said.
“Therefore, GCT on these inputs will become an additional cost for small businesses, that they could previously recover but now cannot. This will make them less competitive than larger businesses that are Gct-registered. In sectors where there is stiff competition, including from the very efficient foreign business owners in the local market, it could even result in them going out of business,” Golding said.
To correct that, he recommended that the Government “swiftly amends section 27 of the GCT Act and paragraph 3 of the GCT Regulations to give these small businesses the right to register as GCT taxpayers if they wish”.
Some of them, he said, may choose not to, and instead try to recover their GCT cost by including it in their sale price. “But others may wish to deal with the administrative inconvenience of monthly GCT filing, and keep the benefit of being able to charge GCT and recover their GCT cost from their GCT collections. They must be given the option of choosing which is better for them,” Golding said.
On the removal of the Minimum Business Tax, he said that the Opposition had no objection on its elimination, as it was “always intended to be a short-term measure”.
Regarding the removal of the transfer tax and stamp duty, Golding said as a corporate lawyer and investment banker he knew that the tax breaks were “music to the ears” of his large corporate and high net worth clients, “who routinely engage in business transactions which incur these taxes”.
“And it could further stimulate the real estate market, which will please the property developers and real estate dealers,” he added.
However, he felt that if the Government was serious about eliminating distortionary taxes on financing transactions it should have looked at real estate mortgages which attract a substantial registration fee of 0.5 per cent.
“To achieve a complete elimination of such Government charges on financing transactions, the percentage registration fee would need to be replaced by a reasonable fixed registration fee,” Golding suggested.
He also said that with the new fixed amount of $5,000 for stamp duty charges on loan security documents would mean that the transaction costs on many smaller secured loans to micro and small businesses would actually go up. However, this was disputed by Dr Clarke, who rose on a point of order to clarify the issue.
Golding added that consumers struggling under financial stress needed a break.
“It was the ordinary Jamaican consumer who has carried the burden of the increased indirect taxation. This includes over $31 billion of new indirect taxes imposed to pay for the ‘1.5’ election promise,” Golding said in reference to the Government’s increase of the income tax threshold to $1.5-million.
“The single mother needs a break for her family. The taximen need a break. The person doing a little selling needs a break. The farmer needs a break. The hairdresser needs a break,” he insisted.