The Government has heeded calls to scrap its plan to
place General Consumption Tax (GCT) on zero rated items, including basic foods.
Prime Minister Bruce Golding on Wednesday night unveiled a revised tax package which also excludes items such as sanitary napkins, disposable diapers, orthopedic apparatus including wheelchairs as well as construction services and funeral expenses up to $100,000.
However, the increase in the GCT from 16.5% to 17.5% and the tax on fuel sales will still take effect as scheduled on January One.
So too will the tax hike on cigarettes.
It was also announced that workers in the high salary bracket will start paying more income tax come next year.
Other measures are coming to help the Government raise $22 billion in revenues.
After six days of his administration coming under fire for its controversial tax plan Prime Minister Golding returned on Wednesday night with an amended package.
In an address to the nation the Prime Minister announced that the tax man will be turning his attention to those with deep pockets.
Workers who earn more than $5 million annually will pay more income tax come 2010.
"The personal income tax rate will be increase to 27.5% on all income above the threshold for persons earning in excess of $5 million and 35% for persons earning in excess of 10 million. In other words persons earning up to five million will continue to pay the existing rate of 25%,"
"Those earning more than $5 million will be charged an additional 2.5% on their taxable income and those earning over $10 million an additional 10% on their taxable income," Mr. Golding said.
The tax measure, which will remain in effect until March 31, will earn the Government $1.3 billion.
Increased taxes will also be placed on high end vehicles as well as luxury goods.
"Motor vehicle licenses for motor vehicles with an engine capacity of 3000cc and above will be increased by $4,000 per annum. Additional tax rates ranging between 20% and 25% be applied to special luxury goods such as jewellery, television sets exceeding 32 inches, shot guns and shot gun cartridges, jet skis and pleasure boats these measures will yield an additional $542 million,"
And a change has been made to the plan to charge GCT on electricity bills.
Households which use more than 200 kilowatts of electricity monthly will pay 10% GCT instead of the previously announced 17.5%.
The 10% GCT will also be applied to electricity consumed by both commercial and industrial customers.
The Government expects to rake in $711 million from the measure.
In the meantime, importers have also been hit by the new tax measures.
Effective next year, they will start paying GCT on the goods they import.
Mr. Golding says this is aimed at plugging loopholes in the tax system.
"Importers pay GCT on the goods they import. When they sell those goods they charge GCT which should be paid over to the government minus the GCT they paid at customs. Many of them are pocketing the GCT and not paying it over to the government. Until we can bring them into the GCT net we must collect something from them. We will therefore be introducing a 5% advance GCT payment on all taxable goods imported," he said.
He says he does not expect the new tax will lead to price increases as importers who file GCT returns will be able to deduct the amount from their payments.
The Government is projecting that this measure will yield $2.9 billion in revenues.
Meanwhile the island's hoteliers are also facing additional taxes.
However, the tax measure will not be implemented until the start of the 2010/2011 Financial Year.
"The tourism sector currently enjoys a special 50% GCT rate, this will now be fixed at 10% as of April 1, 2010 and this is expected to yield $1.2 billion," he said.
In the meantime, the People's National Party which warned of more protests if the Government did not withdraw its tax measures says it is not satisfied with the adjustments made.
When contacted on Wednesday night, PNP President Portia Simpson Miller said Party officials will be meeting to review the amended tax package before issuing a full response.
"Well I am going to be meeting with my economic team and certainly we are going to be looking at the Prime Minister's presentation and look at it and some of the implications of the things he announced and how it will benefit the Jamaican people, the impact it will have on the working class, the middle class and the poor and most vulnerable," Mrs. Simpson Miller said.
Prime Minister Bruce Golding on Wednesday night unveiled a revised tax package which also excludes items such as sanitary napkins, disposable diapers, orthopedic apparatus including wheelchairs as well as construction services and funeral expenses up to $100,000.
However, the increase in the GCT from 16.5% to 17.5% and the tax on fuel sales will still take effect as scheduled on January One.
So too will the tax hike on cigarettes.
It was also announced that workers in the high salary bracket will start paying more income tax come next year.
Other measures are coming to help the Government raise $22 billion in revenues.
After six days of his administration coming under fire for its controversial tax plan Prime Minister Golding returned on Wednesday night with an amended package.
In an address to the nation the Prime Minister announced that the tax man will be turning his attention to those with deep pockets.
Workers who earn more than $5 million annually will pay more income tax come 2010.
"The personal income tax rate will be increase to 27.5% on all income above the threshold for persons earning in excess of $5 million and 35% for persons earning in excess of 10 million. In other words persons earning up to five million will continue to pay the existing rate of 25%,"
"Those earning more than $5 million will be charged an additional 2.5% on their taxable income and those earning over $10 million an additional 10% on their taxable income," Mr. Golding said.
The tax measure, which will remain in effect until March 31, will earn the Government $1.3 billion.
Increased taxes will also be placed on high end vehicles as well as luxury goods.
"Motor vehicle licenses for motor vehicles with an engine capacity of 3000cc and above will be increased by $4,000 per annum. Additional tax rates ranging between 20% and 25% be applied to special luxury goods such as jewellery, television sets exceeding 32 inches, shot guns and shot gun cartridges, jet skis and pleasure boats these measures will yield an additional $542 million,"
And a change has been made to the plan to charge GCT on electricity bills.
Households which use more than 200 kilowatts of electricity monthly will pay 10% GCT instead of the previously announced 17.5%.
The 10% GCT will also be applied to electricity consumed by both commercial and industrial customers.
The Government expects to rake in $711 million from the measure.
In the meantime, importers have also been hit by the new tax measures.
Effective next year, they will start paying GCT on the goods they import.
Mr. Golding says this is aimed at plugging loopholes in the tax system.
"Importers pay GCT on the goods they import. When they sell those goods they charge GCT which should be paid over to the government minus the GCT they paid at customs. Many of them are pocketing the GCT and not paying it over to the government. Until we can bring them into the GCT net we must collect something from them. We will therefore be introducing a 5% advance GCT payment on all taxable goods imported," he said.
He says he does not expect the new tax will lead to price increases as importers who file GCT returns will be able to deduct the amount from their payments.
The Government is projecting that this measure will yield $2.9 billion in revenues.
Meanwhile the island's hoteliers are also facing additional taxes.
However, the tax measure will not be implemented until the start of the 2010/2011 Financial Year.
"The tourism sector currently enjoys a special 50% GCT rate, this will now be fixed at 10% as of April 1, 2010 and this is expected to yield $1.2 billion," he said.
In the meantime, the People's National Party which warned of more protests if the Government did not withdraw its tax measures says it is not satisfied with the adjustments made.
When contacted on Wednesday night, PNP President Portia Simpson Miller said Party officials will be meeting to review the amended tax package before issuing a full response.
"Well I am going to be meeting with my economic team and certainly we are going to be looking at the Prime Minister's presentation and look at it and some of the implications of the things he announced and how it will benefit the Jamaican people, the impact it will have on the working class, the middle class and the poor and most vulnerable," Mrs. Simpson Miller said.
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