Prime Minister Andrew Holness says his Government is “favourably disposed” to increasing the current income-tax threshold as Jamaicans continue to battle inflation’s effects.

Holness made the declaration while speaking on Taking Stock with Kalilah Reynolds.

Currently, Jamaicans earning more than $1.5 million a year are required to pay 25% in income tax, also known as PAYE. 

The Government is facing renewed calls to increase the income tax threshold to relieve some pressure, especially on young professionals, as the impact of higher inflation rates, brought on by the pandemic, hit Jamaicans in the pocket. 

According to the Statistical Institute of Jamaica, point-to-point inflation in July was 6.6%, down from a peak of 12% during the pandemic, but still outside the Bank of Jamaica’s target range of 4-6%. 

Analysts have said that given the increased cost of living, the income tax threshold adds an additional layer of burden. 

An increase in the tax threshold would give some Jamaicans more breathing room, receiving more money in their take-home pay.

“What we do not want to do with taxes is play around with them too much. The policy of this Government is to keep taxation stable. Once you price in what the tax is and you know that this tax is not going to increase on you, you’re in a far better position,” the Prime Minister said.

He acknowledged, however, that inflation has a lagging effect and so the impact of higher inflation during the pandemic is just now being felt.

“I think the Jamaican people can rest assured that you have a Government that believes in letting you keep more money in your pocket and letting you decide what you do with your income,” Holness said.

The Prime Minister did not give an indication as to a timeline for the Government’s decision to increase the threshold. He also did not hint at what the new threshold might be.