PSOJ praises 'pro-business' budget, urges clarity on $14b revenue loss from income tax threshold increase

The Private Sector Organisation of Jamaica (PSOJ) says it's "unclear" how the Government will cover a $14-billion revenue loss from the planned income tax threshold increase. But it is hailing the budget proposed for the next financial year for its "pro-business stance" and commitment to fiscal discipline.

In a media statement Monday, the group welcomed several measures aimed at stimulating investment and reducing financial burdens but raised concerns over the revenue impact of raising the tax-free income threshold to $2 million over three years, which it said is expected to cost $13.97 billion.

“It remains unclear how the government plans to offset this revenue loss,” the PSOJ said.

Last week, Finance Minister Fayval William opened the debate on the $1.3 trillion budget proposed for the upcoming 2025-2026 financial year, which starts on April 1.

The PSOJ added: "The private sector welcomes the pro-business stance of the budget, particularly the measures promoting investment, reducing financial burdens, and maintaining fiscal discipline. However, there is a need for greater strategic focus on economic expansion, public sector efficiency, and crime reduction to ensure sustained national development."

The Metry Seaga-led group listed what it calls "strengths" and "shortfalls" of the budget.

Strengths:

-Continuation of a fiscally responsible approach that has reduced national debt and maintained macroeconomic stability.

-No new taxes, ensuring businesses and individuals do not face additional financial burdens.

- Tax incentives for investment, particularly the accelerated capital allowances and reduced DWT (Dividend Withholding Tax ), are welcomed measures that can spur economic growth.

- Increased support for small and micro businesses, through the Micro Market and GCT threshold adjustments, will facilitate formalization and expansion.

- Commitment to disaster preparedness and economic resilience demonstrates prudent planning for potential external shocks.

Budget Shortfalls:

- Economic Growth Challenges: Despite fiscal discipline, Jamaica’s growth potential remains constrained by high crime rates, low productivity, and structural weaknesses. More targeted investments in productivity and innovation are needed.

- Public Sector Productivity: The budget acknowledges the need for efficiency in the public sector but does not outline clear policy mechanisms for improving service delivery and accountability.

- Clarity on Future Revenue Streams: The proposed increase in the personal income tax threshold will cost $13.97B over three years. However, it remains unclear how the government plans to offset this revenue loss.

- Limited Specifics on MSME (Micro, Small, and Medium-sized Enterprises,) Growth Strategies: While the Micro Market is a positive step, more concrete policies to support MSME capacity building, market access, and technological advancement are necessary.

- Regulatory Barriers for Micro Market Participants: Many small businesses lack the financial and structural resources to comply with the JSE’s strict regulatory framework, particularly the high costs of annual audits ($500,000 – JMD$2M per year). Without government intervention, such as audit subsidies, reduced compliance requirements, or simplified reporting standards, the Micro Market may struggle to fulfill its intended role in fostering MSME growth.

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