JMMB head calls for return of COVID favour over asset tax

Keith Duncan, CEO of JMMB Group Limited, on Monday urged the Jamaican government to phase out the asset tax, citing the financial sector’s previous support during the pandemic.

The sector backed the government during COVID-19, and now it’s time for the it to return the favour, he stressed.

“We, in our wisdom, went to Clarke in March of that year,” Duncan said, referring to Finance Minister Dr Nigel Clarke.

“We said, ‘Keep the asset tax; there is too much uncertainty, and we need to give you the fiscal room to manage through COVID’,” he said while reporting on the company to shareholders at the annual general meeting in Kingston.

“But the financial sector didn’t put it in writing, because we were also dealing with COVID,” he added.

The participants involved in the deal were the Insurance Association of Jamaica, Jamaica Bankers Association and Securities Dealers Association of Jamaica, he said.

“It’s a distortionary tax,” Duncan declared. “We believe enough fiscal room has been made and now it is time.” he asserted.

JMMB Group paid $1.14 billion in asset tax in its past fiscal year ending March 2024, which was twice the size of the dividends paid out to shareholders. Duncan also noted since the tax’s introduction in 2013, JMMB alone has paid over $6 billion, a charge that’s additional to corporate income taxes, which for regulated institutions is set at a rate of 33 per cent compared to 25 per cent for other businesses.

In 2020, as the pandemic reached Jamaica, financial institutions, negotiated with the government to delay a planned reduction in the asset tax, which was originally proposed to be cut in 2019.

“It was in the budget to halve the asset tax and then phase it out,” Duncan explained.

Currently, Jamaica’s macroeconomy serves as a model for the wider region. Donor institutions have commended Jamaica for being one of three nations to slash debt after the pandemic. The microeconomy, however, continues to face headwinds.

During the meeting, Duncan pointed to broader struggles of the financial sector, particularly the losses some institutions faced due to volatile capital markets and high interest rates aimed at curbing inflation, while urging the Jamaican government to fulfil its original commitment to phase out the asset tax.

JMMB Group generated $10 billion in interest income for the June 2024 quarter but expenses led to loss of $1.5 billion.

steven.jackson@gleanerjm.com