From Caribbean360

KINGSTON, Jamaica, Friday May 2, 2014, CMC – Plans to impose a tax on bank withdrawals as part of revenue measures for the 2014/2015 financial year, have been scrapped.

Faced with intense opposition to the proposed tax, the Simpson-Miller administration has decided to look elsewhere, to collect revenues for the Budget.

Finance Minister Dr. Peter Phillips who made the announcement as he closed the Budget Debate on Wednesday afternoon, said the gap will be filled by the life insurance industry .

“The first being the introduction of a 15 percent withholding tax on all insurance premiums paid by Jamaican residents to non residents, premiums paid by Jamaican residents to by registered Jamaican insurance companies will be exempt. The objective of this measure is to assist us in improving compliance while we strive to protect the most vulnerable.”

Phillips also announced a modification of the tax relating to imported service.

“The second measure relates to the GCT (General Consumption Tax) act to improve the rules related to imported services. GCTm which was introduced in 1991 provided for a tax on imported services, this was amended in 2003 to strengthen the mechanism for the effective collection of the GCT. The Cabinet in 2009 noted that there were additional loop holes and sought to address these by approving amendments including streamlining the treatment of imported services. To ensure policy continuity within the context of tax reform, these amendments are now being undertaken,” Phillips said.

Both revenue measures are expected to rake in J$2.3 billion (One Jamaica dollar=US$0.004 cents) .

And there has been a delay to the tax regime on alcoholic beverages in the tourism sector.

“In relation not the alcohol regime to unify the specific consumption tax on all alcoholic beverages we have deferred the implementation of this measure for one month for the tourism industry only .This is in response to a request from the Jamaica Hotel and Tourist association for additional time to look at implementing this measure.This will result in a revenue loss of approximately J$36 million.

Meanwhile, in quick response to the Minister’s announcement, Citizens Action for Principle and Integrity (CAPI), has welcomed the governments decision to reverse the bank withdrawal tax, which its says was widely perceived to be unjust.

CAPI says going forward, it is urging the government to recognize the value of consultation in crafting future budgets, and its usefulness in facilitating consensus on national issues.According to the group, it is hopeful that this signals a new era of governance, in which passive protest and resistance are enough to dissuade the government, instead of resorting to radical and disruptive methods of protest.

For more on this story go to: http://www.caribbean360.com/business/jamaica-government-withdraws-proposed-bank-tax#ixzz30gBmXLe4