Private Sector Organisation of Jamaica's Economic Policy

 The Gleaner continues its publication of elements from the Private Sector Organisation of Jamaica's Economic Policy Framework.

Eliminate stamp duty and registration fees for transferring loans and mortgages from one financial institution to another

Currently, banks compete for loans once, at the time the loan is given. Even if another institution was to offer the borrower a better deal in the future, since the transaction costs of transferring the loan are so high, people seldom switch. The result is less competition, higher spreads, higher interest rates to end users and ultimately lower growth and fewer jobs. Many of these switching costs such as stamp duty, transfer tax and registration fees are set by the Government.

Immediately eliminating the transfer tax and stamp duty on the transfer of loans and mortgages from one financial institution to another would promote competition among banks and building societies and lead to lower interest rates for consumers. Best of all, it would not significantly reduce Government's tax collections since the current high cost of such second-round fees presently inhibit these transactions, so that the Government would not be giving up any taxes.