Unfair burden
Published:Monday | May 16, 2011 | 12:00 AM
- PM says wealthy Jamaicans benefiting more from current tax policies
Livern Barrett, Gleaner Writer
Charging that successive administrations have institutionalised the transfer of resources from the poor to the rich, Prime Minister Bruce Golding yesterday said some of the tax-reform proposals tabled in the House of Representatives last week are designed to change that game.
Golding held up the general consumption tax (GCT), which could be slashed to 12.5 per cent from 17.5 per cent come January, as one example of his government's game-changing move.
The Green Paper also proposes that the statutory corporate income tax of 33.5 per cent be reduced to 30 per cent by January 1, 2012, then to 25 per cent by 2013 in line with what is now charged for personal income tax.
It also proposed that the personal income-tax threshold, which now stands at $441,168 per annum, be increased to $507, 312 starting January 2012.
Yesterday, Golding said the rich are benefiting far more than the poor in the case of basic food items that do not attract GCT.
"Some of those items that we are subsidising and believe that is the poor that we are helping out, we subsidising a whole heapa rich people," Golding told Jamaica Labour Party (JLP) supporters at its Area Council One meeting at Tarrant High School in St Andrew yesterday.
"Because when you go there (to the supermarket), you can only buy one pound a it (food items), dem (the rich) buy 15 pounds. So they get 15 pounds worth of subsidy, you only get one pound worth of subsidy because that is all you can afford to buy," he added.
Golding conceded that some items will have to remain outside the GCT column, but said the thinking within his administration is to identify other items that will attract the tax and simultaneously bring down the GCT rate.
"Then now, for those people who are really going to have it hard with those items, find a way to use some of that GCT that you will now be collecting to direct the assistance to them so that when they go to the shop, they can afford to pay for it," he reasoned.
"Let me explain it another way, instead of subsidising rich and poor, subsidise the poor. That's what we are saying, find a way," Golding added.
Basic food items such as rice, flour, sugar, bread, syrup and salt do not currently attract GCT. The proposal before Parliament for the reduction of GCT indicates that it would be necessary to impose GCT on some goods and services that are now zero rated.
student-loan reform
Meanwhile, the prime minister also took issue with the current subvention the Government provides the University of the West Indies to ease the financial burden on "poor people children".
"In doing that, the $3.5m-a-month man ... his daughter and his son are benefiting from that money too. So what (education minister) Andrew (Holness) is proposing - and I support him 100 per cent - let's move the money to the students, not the university," he explained.
Holness has suggested that the subvention be taken from the universities and given to the Students' Loan Bureau to help provide loans for students pursuing tertiary education.
The minister has conceded that tertiary institutions may hike fees to offset the cut in subvention.
"... Of course, this could increase the cost students would have to bear, but at the same time this could lead to the Government significantly reducing the interest rates, and lengthening the period for loan repayment," Holness said earlier this month.
Meanwhile, Golding has cited the National Housing Trust as another example of resources of the poor being transferred to the rich.
"This business where poor people money is supporting richer people and then poor people have to depend on Government to turn 'round and see how they can help them. We have to move away from that," he said.