Opposition praised for proposal to phase out asset tax

 

Economist Keenan Falconer says a proposal by the parliamentary opposition to phase out the asset tax that commercial banks are required to pay, could significantly help to drive down interest rates.

 

Mr. Falconer believes the plan will be received favourably by the financial sector. 

 

"They have been complaining about it for a while because it could de-capitalises the sector. And if you want to grow, and it appears that both the PNP and JLP have recognised that the private sector needs to be empowered to grow the economy, then freeing up that extra capital by now phasing out the asset tax over time is now going to allow that capital to be deployed in more growth enhancing and revenue generating activities. And that will ultimately help to bring interest rates down over time," he explained. 

 

Shadow Finance Minister Julian Robinson announced the proposal during his Budget Debate presentation on Thursday, arguing that if it were to phase out the asset tax, then the banks must be willing to address the issue of exorbitant bank fees.

 

Meanwhile, Mr. Falconer believes one of the shortcomings of the Shadow Finance Minister's contribution to the Budget Debate is the inability to explain how much revenue will be lost from some of the proposed measures and how a PNP-led government would make up for the shortfall as well as fund social initiatives.

 

Mr. Robinson promised that under a PNP administration, asset tax for banks will be phased out, newly registered companies will be exempted from corporate tax for three years, electricity bills for seniors will be capped and pensioners would pay a flat rate for water.   

 

"[It's] difficult to quantify the specific costs for that. And I think that might be a drawback of the presentation. It would have been useful to benefit from some of the numbers that we hear in terms of how much this is expected to cost the government," he said.