Abolish PAYE, implement CDF tax
Published:Thursday | December 26, 2024 | 12:06 AM
THE EDITOR, Madam:
If it were up to most of us Jamaicans, we would want to pay zero per cent towards taxes, but most of us appreciate a tax for National Housing Trust (NHT), education and National Insurance Scheme (NIS). Employees contribute three, 2.25 and two per cent towards NIS, education and NHT tax, respectively, while employers contribute 3.5, 3.3 and three per cent towards education, NIS, and NHT and respectively.
The Government of Jamaica should abolish the pay as you earn (PAYE) tax and introduce the Constituency Development Fund (CDF) tax. Currently, each constituency receives $22 million annually to develop and assist a constituency. The $22 million is structured in four categories: $10 million towards roads, $6 million towards de-bushing, $3 million towards garbage collection, and $3 million towards drain cleaning.
It is clear that $110 million per constituency, or $7 billion for five years, is clearly not enough. I believe all constituencies should have an allocation of $60 million annually – $300 million per constituency, or $19 billion for five years, in total, for 63 constituencies, which will be very impactful. The cost for the income tax reverse of $20,000 for over 240,000 workers annually is $11.4 billion. If that programme is scrapped, at least three out of five years will be budgeted for, from April 2025 to March 2028. I don’t believe it is difficult to budget $19 billion from April 2025 to March 2030, which is estimated to be $3.8 billion annually .
I am no financial expert, but I believe it is time for the Government to abolish the income tax threshold and have employees who work over $3.5 million annually contribute two per cent and employers three per cent toward a CDF tax. The CDF tax will fund each constituency annually, but surplus from these taxes could be used for fund other parts of the Budget .
TEDDYLEE GRAY
Ocho Rios, St Ann