KINGSTON – The government proclaimed yesterday that it needed no new taxes to finance the 2013/14 budget. But the Opposition, in response, said that’s because the taxes already took effect on April 1.
“The Government has presented a fully funded budget. There are no new taxes in this budget,” Finance Minister Dr. Peter Phillips told the House of Representatives to wild cheers and desk thumping from the Government benches, led by Prime Minister Portia Simpson Miller.
But Opposition spokesman on finance, Audley Shaw, told the Jamaica Observer outside Gordon House that the Government was being deceptive by pretending that there was no new taxation to finance the budget.
“It is deception, because over $12 billion of the tax revenues this year were included in the tax package which was tabled in February but did not become effective until April 1,” Shaw explained.
He also noted that the 2013/14 projections included the $11.4 billion first tranche of the $45.6 billion drawdown from the National Housing Trust, which has boosted non-tax revenue to $36.1 billion.
The February tax measures are expected to boost tax revenues by 13 per cent over 2013/14.
“Those weren’t to achieve targets for the last fiscal year, those were to achieve the targets for the new fiscal year,” Shaw said.
The revenue measures tabled by Phillips in the House yesterday showed a $521-billion expenditure budget, which will be financed by $407.2 billion in revenue inflows, loans totalling $103.3 billion and by the drawing down of $10.4 billion of cash balances.
The revenue inflow is made up of: $360.5 billion in tax revenues; $36.1 billion in non-tax revenues; capital revenue of $1.1 billion; and grants of $9.4 billion, which are basically grant funding from multilateral and bilateral sources, including some of the grants which were held up last financial year while the negotiations for a new IMF agreement continued. The $103-billion in loan financing will include $13.8 billion from domestic sources.
Phillips said that the revenue intake is almost evenly distributed across the three main tax types — income and profits; production and consumption; and international trade.
He said that this year the Government will focus on collecting the taxes already imposed, as the compliance rate is well below acceptable standards and must be improved if the country is to get out of the debt trap. The Government also intends to streamline the collection of taxes to remove inefficiencies and distortions.
Outside Gordon House, Shaw cautioned that the full impact of the tax measures will be felt over the next few weeks. He said, too, that he was not impressed by the growth agenda presented by Phillips, as it did not focus on some of the fundamental problems in the economy, including energy.
According to the Opposition spokesman, the high cost of energy would continue to militate against productive sector opportunities.
“The adequate and timely availability of foreign exchange is also going to be an issue,” Shaw added, “because there are companies already threatening to close down or scale down operations, because they can’t get the foreign exchange they need to purchase raw materials.”
The debate continues Tuesday with Shaw’s response to yesterday’s opening salvo from Dr. Phillips. (Observer)