By Lavern Clarke, Staff Reporter 
Dr. Omar Davies (left), Finance and Planning Minister, at a news conference yesterday at his Heroes Circle office, central Kingston. In the background is Shirley Tyndall, Financial Secretary. To his left after Fitz Jackson, Minister of State for Finance; Derick Latibeaudiere, Governor of the Bank of Jamaica; and Clive Nicholas, Director-General of Tax Administration. - Rudolph Brown/Staff Photographer
DR. OMAR Davies, Finance and Planning Minister, has dismissed as unlikely, claims that the new four per cent import cess would increase shelf prices by eight per cent, arguing that the pass-through cost would come out at two per cent.
The Ministry estimates that it will net $3.4 billion in revenue from the cess, which mandates that importers pre-pay a portion of their income on imported items that they will earn on, later.
The positive side of the tax, said Davies, is that it will bring more of the informal sector into the net.
He acknowledged, however, that it does penalise formal businesses because of the impact it will have on cash flow as well as added interest costs, but said the tax itself was recoverable by businesses that file returns.
"This is a claim-back," Davies said, stating that the ministry's analysis shows that the cess would see a "maximum" two per cent increase in prices.
"If we assume that each formal firm files quarterly returns then that credit can be advantageous on the quarterly returns," the minister said at his post-budget press conference at his Heroes Circle office in central Kingston on Tuesday.
Businesses generally file their returns annually. Clive Nicholas, Director-General in the Ministry of Finance with responsibility for Tax Administration, said however that while it was not done in practice, the law does require that companies file "estimated" tax returns quarterly.
The Ministry says it is to publish today the full list of items that are now subject to General Consumption Tax (GCT), from which Government hopes to net an additional $8 billion in new revenues.
Dr. Davies also anticipates that businesses will pass on their increased liabilities from GCT to consumers, noting that the seven per cent inflation target, which is 0.8 per cent above last year's outturn, takes this into account.
But even as the Minister anticipates that his tax measures will impact disposable incomes, he told The Gleaner at the close of his post-budget press conference that there will be no increase in the income tax threshold this year. Davies said the items were undergoing a final review before publication based, he said, on public entreaties for some items to remain on the zero-rated list. "We're looking at a couple of sensitive areas," he said.
The new taxable items will likely be published on the ministry's web site as well as in the press, Nicholas told The Gleaner after the press conference.
Davies said the projections for revenue collections from the expanded GCT base was less money than his ministry estimated was escaping the net. That figure, calculated on the current 15 per cent rate, was $13.5 billion.
