By Andrew Green, Staff Reporter 
Joseph M. Matalon addressing Parliament yesterday.
CONSUMERS WOULD take home more pay but would end up paying more in stores and at the fuel pumps if new proposals to reform the tax system by a 12-member Matalon committee are implemented.
The suggestions by the Joseph M. Matalon-led review committee, tabled in Parliament yesterday, include the elimination of zero-rating under the general consumption tax (GCT) for all goods and services except exports.
RAISING GCT
This would see all purchases attracting the same GCT rate. In addition, the tax review committee recommended the raising of the GCT rate by one per cent to 16 per cent.
Minister of Finance and Planning, Dr. Omar Davies, appointed the Matalon committee in 2003 to simplify the country's complex tax system, but not to raise or lower overall taxes.
Based on the recommendations, some higher-income earners would suffer a reduction of GCT exemptions, the abolition of allowances, accommodation (rental) relief and preferential treatment of gratuities.
One suggestion that the committee recognised was likely to be unpopular was to apply a combination of GCT and Special Consumption Tax (SCT) to motor vehicle fuel purchases. This would automatically increase fuel prices, potentially raising $2.7 billion in revenue.
Another $2.7 billion in revenue could be generated for the government if the SCT should be indexed to inflation.
Owners of capital would be hit by a suggestion that sales of shares be made subject to tax. But some consumers would also pay more for motor vehicles while others paid less, based on a suggestion for a standard GCT rate on all vehicles with a SCT based on engine rating.
On the positive side, the
committee suggested that the
individual income tax threshold be increased more than 100 per cent to $275,184. It also proposed the abolition of stamp duty and application of transfer tax at a reduced rate of five per cent to benefit property owners.
Property owners would also benefit from a one per cent property tax with a $300,000 exemption.
Taxpayers and business owners would benefit from the elimination of the Education Tax and HEART Trust contributions. The report is next to be debated in Parliament.
