'No new tax in revamped Budget'
Published:Tuesday | August 16, 2011 | 12:00 AM
- But Vaz says massive cuts in plan
THE BRUCE Golding administration has ruled out imposing new taxes on Jamaicans as part of its efforts to recalibrate the busted Budget.
Daryl Vaz, minister with responsibility for information, told The Gleaner yesterday that Cabinet, which is considering a Supplementary Budget, is going over several options in its review.
"We are considering the most effective cuts which will have the least impact on the social security net," Vaz said yesterday.
He was not forthcoming about the extent of the cuts being considered by the Cabinet, but well-placed Government sources say $7 billion is to be sliced.
Finance Minister Audley Shaw has been forced to revisit the $544.7-billion package he tabled in April after the International Monetary Fund (IMF), with which Jamaica has entered a borrowing relationship, refused to review the country's economic programme for two consecutive terms.
Shaw has pointed to the country's wage bill as a percentage of gross domestic product (GDP), as well as the need to divest all Clarendon Alumina Partners as reasons for the IMF stance.
Lowering wage bill
Jamaica has committed to, among other things, lowering the wage bill as a percentage of GDP to nine per cent by 2015-2016 fiscal year. The current wage bill stands at 10.7 per cent of GDP and government sources say the IMF is not convinced about the credibility of Government's projections to lower the wage bill.
The Ministry of Finance has been struggling to operate within the tight fiscal space. It has underspent expenses by $9 billion in the first quarter of the fiscal year by cutting back on several programmes. Revenues have underperformed by $3 billion.
The Budget approved by Parliament in April is positioned to achieve GDP growth of 1.5 per cent.
When he tabled the $544.7-billion spending plan in April, Shaw stayed away from new taxes. He said the administration would be plugging a $140.8-billion hole in the Budget by raising $97 billion on the domestic market and $43.8 billion from external sources.