WESTERN BUREAU:
Michael McMorris, chairman of the Victoria Mutual Group, says the Government’s failure to abolish distortionary, temporary asset taxes in the same manner it did for non-financial businesses has forced financial institutions to increase interest rates.
“It brings greater drag to that impetus; it actually caused us not to be able to lower rates, but, rather increase rates because of the additional drag from that taxation,” McMorris said while speaking at last Wednesday’s official opening of the new Victoria Mutual Fairview Financial Centre in Montego Bay, St James.
“Such a tax is actually a disincentive to growing the business and adding loans for organisations like ours, which are committed to broadening financial inclusion by attempting to extend credit across the length and breadth of our society,” added McMorris.
Finance Minister Dr Nigel Clarke, as part of the Government’s 2019-2020 Budget, which is aiming to boost economic activities and promote business start-ups, abolished $14 billion in taxes, including the temporary asset tax for non-financial businesses.
“Minister Clarke, I personally endorsed those moves, but believe it would be a good decision not to stop halfway, but go all the way in eliminating distortionary taxes such as the distortionary, temporary asset tax on financial institutions,” said McMorris.
He added that the decisions made by the Government to remove taxes for their distortionary impacts for a fraction of the business sector are good decisions, but they could have gone much further to include the entire financial sector.
Clarke, who also spoke at the opening, said the Government’s decision has been carefully decided so as to ensure that businesses, small businesses in particular, and the Government are aligned.
“I heard the chairman (Michael McMorris), but we have to start somewhere. I don’t think we have had in any Budget presentation, one that uses the word ‘abolish’ as much as I had the pleasure of doing,” said Clarke.
“Not only did we abolish the asset tax, which is a scourge on small businesses, where you had to fork over to the Government money, regardless of what’s happening in your business, but we said look, that is not conducive to economic activity and business vibrancy. We want to be aligned to the business, we want to be aligned with small businesses. So, what we did? We abolished the asset tax for non-financial business,” Clarke said.