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Prince Moore reports
Effective December 31 this year, Jamaicans in the United States sending money to their relatives back home will have to pay a 1% excise tax on such transactions.
The tax is set out in the One Big Beautiful Bill Act passed by the US Congress, expected to be signed by President Donald Trump on Friday.
By charging senders a 1?e, the bill raises the cost of remittances.
This could lead some migrants to send less money or send money less frequently, negatively affecting recipients' spending power in countries like Jamaica.
Jamaica is expected to experience a direct economic downturn from the new US remittance tax as it represents a transfer of resources to the US Treasury. The tax is projected to raise roughly US$10 billion in revenue across all countries.
Jamaica currently receives roughly US$3.3-$3.5 billion in remittances annually, the majority of which comes from Jamaicans in the United States.
Remittances currently account for 17-20% of the country's gross domestic product (GDP).
The Bank of Jamaica has already flagged US policy changes on remittances as a downside risk to Jamaica's economic outlook.
Therefore, any reduction in remittance inflows could constrain household consumption, education and healthcare spending, as well as small business support.
In the original version of the bill passed by the US House of Representatives, the tax on remittance was set at 5%, but the US Senate reduced it to 1%.
The new tax will be imposed on remittances sent as cash, money orders, cashiers' checks, and similar such instruments.
Funds sent by debit or credit cards or bank wire transfers will not attract the new tax.
According to the provisions of the bill, the new tax will be limited mainly to green card holders or permanent residents and visa holders.
Citizens sending monitor relatives in Jamaica will not be subject to the new tax.
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