It would not be wise to consider new taxes - PSOJ to gov't

The Private Sector Organisation of Jamaica (PSOJ) says it would not be wise for the Jamaican government to consider any new taxes as a means of meeting the public sector wage target under the loan programme with the International Monetary Fund. 

In a release yesterday, the IMF, said the government will face what it calls undesirable policy options like tax increases and job cuts, if it is to achieve the target of cutting public sector wages to nine per cent of gross domestic product (GDP). 

According to the fund, the wage agreements signed by the government so far exceed the target.

It says to offset the additional expenses, the options facing the government would be limited to either compressing non-wage primary spending or raising additional revenue.

Raising revenues could take the form of taxation and PSOJ president, William Mahfood says that option would only scare off investors at this time.

Meanwhile, he says the government should focus on growth inducing measures such as removing special rates for certain sectors. 

The current wage agreements which now stand at 10.1 per cent of GDP, are set to cover two years. 

However, Jamaica has committed to reducing the wage bill to nine per cent of GDP for the upcoming 2016-2017 financial year.

The IMF warns that the costs to the economy for failing to contain the wage bill to the nine per cent of GDP are likely to be high.