Clarke: Tax break a moral imperative
Published:Thursday | March 12, 2020 | 12:23 AM
Finance and the Public Service Minister Dr Nigel Clarke has defended the $18-billion tax break package that forms a major plank of the 2020-2021 Budget.
He said that the decision to cut general consumption tax (GCT) by 1.5 percentage points and the asset tax in half, as well as offering small businesses a tax credit, was the right thing to do against the backdrop of heavy taxation from past administrations.
“All the money that the Government has comes from the people of Jamaica, and they know how best to spend their money. After governments over the past 20 years have raised over $185 billion of taxes from the Jamaican people, we see giving back taxes in the way that we’ve done as a moral imperative,” the finance minister said at a press conference at his Heroes Circle offices yesterday.
He said that apart from the economic stimulus impact the tax break might trigger, it also accelerated the pay-down of debt occasioned by the $73-billion provision in this year’s Budget.
Responding to suggestions that the tax break could have been better deployed in infrastructure and other projects, Clarke argued that Government had increased capital expenditure since taking office in 2016 by 240 per cent and the amount programmed for 2020 was 3.3 per cent of gross domestic product.
“The time that it takes to plan projects and push them through our procurement system means it can take years to develop,” he said.
He also pointed to social cushions such as Marcus Garvey postgraduate scholarships for government workers and the $7-billion contingency for the emergence of COVID-19.
“As we enter a time of uncertainty, Jamaica is in the good position of engaging in a countercyclical approach. In previous crises, we have been in the unfortunate position of doing the very opposite of what we’re doing now,” he said.
Clarke dismissed talk that this year’s Budget give-back was an election ploy.
“This is a very responsible and prudent approach to expenditure, which is in line with inflation and by no means represents an expenditure profile that is connected to any event,” Clarke said.