Poured cold water on marginal income tax threshold increase 

Durrant Pate/ Contributor

Opposition Leader, Mark Golding used his Budget Dabate presentation to denounce the Andrew Holness administration’s no new taxes claim.

The People’s National Party (PNP) President observed that Finance Minister, Dr. Nigel Clarke likes to make a song-and-dance about no new taxes imposed since over J$30 billion of new taxes was imposed in the first two years of the Jamaica Labou Party (JLP) Government elected in 2016. He told Members of Parliament that while no new taxes have been imposed, much more taxes are being collected from the population.

According to him, “it is important to recognize that the taxes being collected from the Jamaican people have risen dramatically under this Government,” presenting a table showing how much more tax is being collected under the current administration. In Financial year 2015/16, the final year of the last PNP administration, the tax collected was J$411.8 billion, which was 24% of Gross Domestic Product (GDP).

Jamaicans taxed much more

However, the tax collected is now over 28% of GDP. “Jamaicans are taxed much more under this JLP Government! Over the four financial years 2021/22 through 2024/25, tax collections have increased by J$419 billion. J$419 billion of additional taxes has been collected from the Jamaican people over the past four years!”

This represents an increase of 66%, which is way more (in fact, more than double) the accumulated inflation of 31% over that four-year period. Looking at tax collection from the perspective of each Jamaican, the Opposition Leader asserted, “since this JLP Government came to office they have more than doubled the annual tax take from every man, woman and child in Jamaica, increasing it by a massive $190,000 per person (to total $342,000 per person of taxation in the 2024/25 Budget). “

Continuing, Golding remarked, “so much for “no new taxes” sankey! No new taxes, but much, much more taxes! And as the recent election shows, who feels it knows it. Jamaica really needs honest Governance, that’s why we are on the road to CHANGE.”

Income tax threshold hike disappointing

Turning to the income tax threshold, the PNP President declared that the meagre hike of an additional J$125,000 per year is very much disappointing pointing out that during the recent Local Government Election campaign, the Prime Minister promised that the income tax threshold would be increased, in what he said would be a “1.5 2.0”. 

Golding reminded the House of Representatives that last September he had called for an increase in the threshold to J$3 million to restore the real value of the J$1.5 million increase of 2016 and to provide some buffer for future inflation pointing to the fact that since 2016, the accumulated inflation is over 46% in Jamaica. As such, he contended that an increase is required to restore the real value of the threshold that was last reset in 2016. 

“After the Prime Minister’s grand election pronouncement of a “1.5 2.0”, persons are understandably very disappointed that the Minister has announced an increase of the threshold to only J$1.7 million. What they expected to be 2.0 million ended up being 0.2 million. This translates to a mere $4,166 more per month in their take-home pay,” Golding lamented. 

He posited, “if the Minister had, as Phase 1 of restoring the value of the J$1.5, even increased the threshold to J$2 million, that would give persons an additional $125,000 per year ($10,400 per month) in their take-home pay. That would be a much more meaningful benefit. And it could be paid for using the $11.4 billion that has been allocated to the one-time $20,000 so-called reverse tax credit. In getting to $3.0 million, as tax inflows continue to grow the threshold can be again adjusted as Phase Two. Madam Speaker, Jamaica needs caring governance. That’s why we are on the road to CHANGE.”