Tax reform ambitious but doable - IDB
Published:Friday | August 26, 2011 | 12:00 AM
Ancile Brewster, country representative of the Inter-American Development Bank (IDB), says Jamaica's attempts at tax reform are ambitions, even as he urged the country's legislators to push ahead with proposals contained in a Green Paper currently before Parliament.
"The scope of this reform is quite extensive, it is ambitious but it is doable," Brewster said Wednesday evening while addressing the Kingston and St Andrew Parish Development Committee on tax reform.
The event, which took the form of a town hall meeting, had Dr Peter Phillips, the Opposition spokesman on finance; Dr Gladstone Hutchinson, director general of the Planning Institute of Jamaica; tax expert Ethlyn Norton Coke; and economist Joseph Cox, chair of the Committee, as panellists.
Brewster, who pointed to the Doing Business Report which says Jamaica's tax system is an impediment to investment, said if Jamaica is able to implement the reforms properly, the country would be able to lower its debt-to-GDP ratio through economic growth.
"We support the reform of the taxation system, we think it can be a game changer for Jamaica if it is properly done, and if it has the support of the citizens, and, of course, our vast resources are at the disposal of Jamaica to make this a reality," Brewster said.
Finance Minister Audley Shaw tabled the Green Paper on tax reform in the House of Representatives in May, outlining different reform options for income, port and consumption taxes. A newly empanelled committee chaired by Shaw will review suggestions from the public starting in September.
"With the expression of concerns, with the expression of interest, with the putting forward of all of the views of everyone who will be affected, we think we have an excellent opportunity this time around to craft a tax regime which will certainly be the envy of the region and, perhaps, further afield," Brewster said.
Shaw's committee will report its deliberations to the full House, after which a White Paper will be issued as the basis for the creation of a new tax regime.
The Green Paper proposes, among other things, a reduction in the rate of General Consumption Tax, raising the personal income-tax threshold, which now stands at J$441,168 per annum, lowering the Common External Tariff on some imports, among other measures.
Brewster said proper implementation of tax reform could help Jamaica solve two important problems.
"One of them is the fiscal deficit which, over time, has eroded the quality of services the Government can provide ... The other area that a good tax reform would help Jamaica in is dealing with the issue of the unsustainable debt," he said.
He said that it is important that the issue of the granting of waivers be given particular attention as these concessions have failed to deliver economic growth for the country, but warned that some groups may find it difficult to wean themselves of their dependence on waivers.
"We must not delude ourselves, it is not an easy task. There are many competing interests," he said.
"What is very important in the entire process is to understand where these interests are, to understand what are the issues, what are their concerns, and to engage in open discussions to see how we can moderate, adjust these specific benefits that they have in a way that not only they benefit, but that the net result of the reform is that, as a nation, we all would benefit," Brewster said.