Fact-checking budget claims by Jamaica’s Opposition Leader and Finance Minister.

Opposition Leader Mark Golding recently made his contribution to the budget debate.  He rebutted several things said by the Finance Minister, Dr Nigel Clarke.

Here’s my take on five of those points.

Number 1 – Golding’s position on the $20,000 reverse tax credit.

Clarke announced recently that the government would be giving J$20,000 cash to all taxpayers who earn less than J$3 million a year, as long as all your 2023 taxes are paid up.

But Golding said it “smells like a $20,000 giveaway for political advantage as we get ever closer to next general election.”

The next election is due by 2025, but the government could call it at any time, even this year.

Additionally, Golding said that it’s not fair to only give it to people whose taxes are paid up, because what if your employer hasn’t paid over your taxes?

“Is this fair? How is it fair to an employee to deny him or her this little benefit in the event that the employer is not compliant with statutory filings, payments and deductions?” Golding added.

I’d say this is a fair point and something Minister Clarke should consider. But then again, Golding also indicated that maybe nobody should get the $20,000 at all!

Which brings me to point number two.

Golding said the money for the reverse tax credit should instead be used to raise the income tax threshold to $2 million.  This would give people who pay income tax $10,000 back in their pocket every month.

The threshold is being raised to $1.7 million, which is only about $4,000 a month less in taxes.

“That $4,166 can’t even buy a bucket of KFC!” Golding said.

We checked and he’s right!  KFC’s smallest bucket is a Family 9, which costs $4,900. That’s about US$32 for my viewers outside Jamaica.

However, if we put all the money into raising the income tax threshold, then people who are currently below the threshold and don’t pay income tax, wouldn’t benefit at all.

Now speaking of taxes, here’s point number 3.

According to Mark…

“Since this JLP Government came to office, they have more than doubled the annual tax take from every man, woman and child in Jamaica.

But Nigel said…

“We are proud to announce no new taxes for the seventh consecutive year.”

So who’s right?  We actually went over this last year because the same claim was made then.

This is the table that Mark showed in Parliament. Yes, it shows that tax collections have gone up from $ 411 billion in 2015/16 to $924 billion in 2023/24.  That’s more than double.

But that same chart also shows that GDP has just about doubled as well.

In 2015/16, Jamaica as a country earned J$1.6 trillion (about US$10 billion) and in 2023/24, the country earned J$3.2 trillion (over US$20 billion).

So duh, if your economy grew, tax collections are going to grow too.  More businesses are paying taxes.  That’s more GCT, more Corporate Income Tax, all collections will go up.

But Golding also made the point that tax as a percentage of GDP also went up from 24% to 28%.

This too can be explained by the growth in the economy and the fact that unemployment is down. According to the Statistical Institute of Jamaica, unemployment in 2016 was over 10%. It’s now down to just over 4%.

More people are working, which means more people are paying taxes.

I think it’s actually a good thing that the government has been able to double its tax collection without raising tax rates or introducing any new taxes.

Now point number 4 is about how the government plans to pay for everything.  All these givebacks are gonna cost about J$25 billion.

Nigel said they’re paying for it by selling receivables, which is money owed to the government.

Presumably, someone has agreed to pay the government up front, and then collect on the receivables later, for a cut of course.

But no details were given.

I agree with him here. The public should know the details of this arrangement, especially since an election may be near, which is something Mark is obviously concerned about.

My last major point from Golding is also about taxes – the GCT being removed from imported raw foodstuffs.

By the way, we finally found out what raw foodstuffs means.

The GCT Act defines it as fresh fruit and vegetables, ground provisions, legumes, onions and garlic, meat, poultry and fish.

Nigel said we HAVE TO take the GCT off these imported foods or risk sanctions from the World Trade Organisation.

But according to Mark…

“Based on our research, the WTO does not blacklist over unilaterally punish member states for non compliance”.

We checked the WTO’s website and we couldn’t find any blacklist, so I guess Mark is right on this one. Technically speaking, it’s not a Blacklist.  But we did find the rule that Nigel was referring to.

It’s the WTO’s General Agreement on Tariffs and Trade, and it’s right here in Article 3:

“Internal taxes … should not be applied to imported or domestic products so as to afford protection to domestic production.”

Note that it doesn’t specifically say GCT isn’t allowed, which Nigel suggested. It seems to indicate that there should be NO internal taxes at all, for the purpose of protecting domestic production. This would mean that this suggestion from Mark would also be a no-go.

“Replace the GCT on imported food stuff with a stamp duty to level the playing field on imported and locally produced foods.”

However, the Opposition Leader also had some other suggestions to help out local farmers.

These include removing GCT from farm supplies such as seeds, farm tools and equipment, and also from local food products like eggs.