MSME Alliance has concerns about proposed tax reform

The small business sector has expressed concern about aspects of the proposed tax reform by the Government.

On Wednesday, Finance Minister Audley Shaw tabled a Green Paper in the House of Representatives on wide-ranging changes to Jamaica's tax system.

Among the proposals are a reduction in the rate of General Consumption Tax (GCT) and a lowering of income tax.

To achieve the tax cut however, it is proposed that consumers pay GCT on certain food items which are now zero rated.

But Dr. Rosalea Hamilton, the President of the Micro, Small and Medium Sized Enterprise Alliance (MSME), is concerned.

While she has praises for the reform, she indicated she was expecting specific provisions that directly impact the sector.     

"I was looking out for the five year tax holiday that is articulated in the growth inducements strategy produced by the PIOJ (Planning Institute of Jamaica). I also saw no reference (to) the tax on energy. Our sector has been very concerned about the high cost of energy and the tax on gas and on diesel. I would love to see a model that looks at the impact of eliminating the tax on diesel," Dr. Hamilton said Thursday evening on RJR’s daily current affairs discussion programme Beyond The Headlines.

Careful monitoring

Meanwhile, a more cautious approach to the tax reform proposals is being urged by one tax expert.

Eric Crawford, who is a partner at Partner at PriceWaterhouse Coopers, feels the elimination of certain GCT exemptions needs to be monitored carefully.

He thinks there is now more room for manipulation of numbers by dishonest businesses, and more room for honest mistakes to be made by reputable entities.

"The elimination of these various exemptions has created both opportunity for evasion and risk for businesses which inadvertently treat with these various rates incorrectly. Because GCT penalties and interest are very punitive if you get is wrong and many people have gotten it wrong over the years largely because of the disparity or the different ways of calculating GCT liabilities," said Mr. Crawford, who was also speaking on Beyond The Headlines.