US proposal for remittance tax could have devastating effects on Jamaica - economist

 

Economist Keenan Falconer is urging the Andrew Holness-led administration to quickly lobby the United States government to reconsider a tax on remittances. 

 

This amid potential economic fallout from the US proposed tax on remittances on Jamaican households that depend heavily on money from overseas to afford basic commodities. 

 

As part of a broader push to crack down an undocumented immigration, Republicans have introduced a new bill in the US House of Representatives, proposing a 5 per cent tax on all remittances sent outside the country by non-citizens, including H1B visa holders and green card holders. 

 

Speaking in an interview with Radio Jamaica News on Friday, Mr. Falconer said the imposition could have devastating effects on critical sectors locally. He urged the Jamaican government as well as CARICOM to lobby the US government to ensure that law is not implemented. 

 

"It will disproportionately affect small island developing states, which are, of course, heavily remittance-dependent, such as those that are in the Caribbean. The Caribbean diaspora in the US is also fairly significant, and the support of the local diaspora leaders and representatives there would also be crucial in trying to reverse that [possible] decision," he suggested. 

 

Mr. Falconer said such a tax, if implemented, would reduce spending power on daily purchases as well as healthcare and education expenses since some Jamaicans primarily rely on remittances.

 

"Additionally, with the imposition of the tariffs also likely to depress consumer spending in the US and which accounts for up to 70% of consumer spending in the US, disposable incomes are likely to fall, which then further compounds the potential fallout in sending remittances. In the long run, if this policy is maintained, it could also discourage Jamaican immigration to the US altogether for persons who are specifically looking to work for a short time with the intention of sending money back home," he reasoned. 

 

Mexican President Claudia Sheinbaum on Thursday denounced the proposed remittance tax, calling it unacceptable. She said it will result in double taxation since Mexicans living in the United States already pay taxes.