TAXES, taxes and more taxes may be the cry of honest citizens in the new year, as the likely outcome of all these outlandish promises being made by political parties as the general election comes to a climax.
No doubt the new Government will wish to have a long 'honeymoon' when it takes office, but the mood is likely to sour quickly as the new Finance Minister (or returning Finance Minister) reminds the country that we have to balance the books, to placate overseas investors and external agencies (IDB; IMF; World Bank)
With revenue inflows from taxes running at almost half the level of expenditure, the stage is set for a steep upward jump in taxes, starting in financial year (FY) 2003. It is also important to point out that the country is committed, in a signed agreement (barring negotiation) to achieving a fiscal balance by financial year 2005.
To do this will therefore mean squeezing from old areas, hiking rates on other areas and imposing new taxes, to up the fiscal take. What then are some of the tax possibilities that loom ahead in financial year 2003?
The most significant is likely to be an adjustment in the General Consumption Tax (GCT) rate, up from its present fifteen per cent level to about seventeen-and-a-half per cent. This is because the GCT is a fairly straightforward tax, that is hard to avoid, but more important, it can generate substantial additional inflows. With the expected flip of rising economic growth, following an election year, the tax authorities should expect a bountiful GCT intake.
Property tax rates should also be sorted out in financial year 2003, which will relieve the Government of burdensome municipal taxes. Expect few amnesties and reductions to be granted next year, so the substantial hikes in these property taxes will be enforced.
The imposition of a (new) Health Tax (or whatever name they decide to use) should also come on stream in 2003. This health tax should benefit health care but it is also likely to generate surpluses for use in general revenue.
The growth of gambling across Jamaica should also be a lucrative source of additional revenue if the regulatory Commission can track down more on the illegal (and off-the board) providers.
All of these could be areas that the new Government focuses on in 2003, as it meets its financial obligations, promises in the silly season nonwithstanding.
