Shipping industry informed on Tax Reform Green Paper

Stakeholders in the shipping industry were last week informed about Government's proposed Tax Reform and the implications for businesses and individuals.

The group was informed during the Maritime and Transport Services Limited-sponsored Lunch and Learn Seminar hosted by the Shipping Association of Jamaica.

Dennis Chung, financial analyst and management consultant, outlined the proposals in the Green Paper, the timeline for implementation and the possible effects on the economy. Chung pointed out that while he is not in agreement with all areas of the proposed reform, he credits the Government for having widespread consultations and education programmes to assist the process.

"The Government needs to consider all the results of the consultations and ensure that feedback is implemented in the best interest of the economy overall, and not special interest groups," Chung said.

Changes can impact

Pointing to the instruments of fiscal policy - government expenditure and taxation - Chung said changes to the level and composition of taxation and government spending can impact:

• Aggregate demand and the level of economic activity
• The pattern of resource allocation
• The distribution of income

Chung noted that the Government's focus on using tax to raise fiscal revenues, negatively impact aggregate demand. This was evidenced in the 09/10 recession.

"Unless this policy approach is changed, then we will continue to make the same mistakes," Chung said. He added, "This is why it is best to take time to understand the framework before rushing to implement the reform proposals."

He concluded that while there may be short-term benefits, if the proposed tax reform is implemented in its current form, it will have a negative effect on Jamaica's economy. He opined that benchmarking should be done against competitive tax regimes in other regions.

"Tax reform by itself is not sufficient to change the economic fortunes and, if not done in conjunction with legislative and social reform, will only cause Government to lose revenues in the long term," Chung said.

Maritime and Transport Services Limited was established in 1966 as a steamship agency. The company provides port management, oil-spill control, bunkering, sales for liner service and warehousing services.