Tax break proposals 'highly aspirational', says Duncan

 

Former co-chair of Economic Programme Oversight Committee (EPOC) Keith Duncan has described the tax break proposals by the Jamaica Labour Party (JLP) and the People's National Party (PNP) as highly aspirational.

 

The JLP is promising to gradually cut the income tax rate to 15%, while the PNP wants to increase the income tax threshold to $3.5 million.

 

Speaking with Hotline host Emily Shields on Thursday, Mr. Duncan questioned whether Jamaica has the fiscal space to accommodate the expected revenue loss from the proposed tax measures. 

 

Mr. Duncan said there will be several risks in relation to the forecast in the fiscal policy paper for wages and salaries, inclusive of employee contribution. 

 

"I know the Jamaica Labour Party put forward a phased approach to the introduction of the 15?se rate on personal income tax, that it would be a phased approach. And I believe what I heard [PNP's Julian Robinson] saying in the debate was that not everything we're going to have to do everyone at one time. So I'm not sure exactly what their plan is, but we definitely know, for sure, that the fiscal space, it would be extremely difficult unless you are to carve out any level of expenditure cuts significant to match up with the revenues lost under either proposal," he reasoned.

 

Mr. Duncan said either proposal would have to be accommodated with additional taxation measures similar to 2016.

 

"Because you don't want to increase your deficit beyond the fiscal balance that you're allowed to run. And therefore if you run a deficit, then you're going to have to borrow to finance that deficit. Now, if you're going to introduce taxation measures - which both parties have said they aren't - then you're going to have to cut expenditures, and as the numbers demonstrate, you don't have the room to cut," he argued.

 

EPOC was disbanded following the establishment of the Independent Fiscal Commission, which came into effect on January 1.