PSOJ labels higher income tax rates as unfair
The Private Sector Organization of Jamaica (PSOJ) yesterday labelled as unfair, aspects of the Government's tax package, particularly the imposition of higher income tax rates for persons earning over $6 million per year.
The PSOJ said that the tax package unfairly places a greater tax burden on approximately 12,000 already compliant PAYE workers, specifically persons earning more than $6 million.
Persons who earn more than $6 million will be taxed at a higher rate of 30 per cent.
The standard rate for PAYE is 25 per cent.
"This measure is a retrograde step which takes us back to before the 1980s tax reform, and which was not effective when tried by the last administration. It will also result in tax avoidance measures, which will prove a distraction to the country's fiscal programme," the PSOJ said.
The private sector body, which is headed by William Mahfood, suggested that the higher income tax measure be reconsidered.
Finance Minister Audley Shaw last week announced that the income tax threshold for PAYE workers would move from $592,000 to $1 million, effective July 1, 2016.
The Jamaica Labour Party (JLP), which now holds state power, had promised to raise the threshold to $1.5 million, starting April 1, 2016. To make up for revenue losses, as a result of the raising of the threshold, the Government has imposed several new taxes, among them a $7 per litre cess on petrol.
"We welcome the intent to move away from direct to indirect taxation, or consumption taxes, as this we believe will better address the compliance challenge we face, where only 326,000 of the 1.15 million working persons are on PAYE, while a significant number of registered companies are not tax compliant," the PSOJ said.