I distinctly recall Finance Minister Peter Phillips being reported as stating last January, “We don’t have plans for taxation. We have plans for tax reform, generally. But we will have to maintain our deficit targets.” It was in The Gleaner of January 8, 2014. So, I must be dreaming then, when I heard the same Minister announce yesterday that the Government will be seeking to raise $6.7 billion in additional taxes this fiscal year. You can hear him make the statement, in case there’s a doubt that he said it. He doesn’t like doing it. He’s not alone. Nor do we, Mr. Phillips, nor do we. Not at all. In fact, when we look at where the money will come from, it’s not pleasant at all.
- Unification of the tax on alcoholic beverages – $844 million
- Levy on withdrawal from deposit-taking institution and encashment from securities dealers – $2.3 billion
- Increase in the age limit in the sale of second-hand vehicles – $26 million
- Asset tax increase – $1.78 billion
- Change in the tax regime for insurance companies – $1 billion
- Modification of the duty regime for specified vehicles $1.2 billion
My eyes, and those of most whom I have heard comment, fall on that levy on banks of withdrawals and encashments. We know the banks are not going to let that levy be a charge on their profits, and will seek to ‘pass it on’–like a hot potato–to customers. Easter is around the corner and Dr. Phillips has just put the nail into whatever may be good about Good Friday. Bun and cheese were nice, but now that the people are going to ‘get bun up’ with this imposition, I feel that those who understand ‘Who moved my cheese?‘ will start to get nervous. Change does that.
Many people were howling recently about the level of bank fees, but a recent CaPRi study showed that for a sample of countries, Jamaica’s banks’ fees ‘compared favourably’. I’m not going to question the sample, but many will. So, people will find that the money that they were encouraged to place in the banking system now becomes more expensive to take out of the banks because of fees AND because the Government wants a slice of the transactions. So, in addition to losing money through tax on pay, persons, will lose money on taking out money to pay bills. Stay with me here. You start with a $100 and give $25 to the government, and now you have to lose more to the government to pay for phone, water, electricity, groceries, every blessed living thing, as my grandmother used to say.
The PM has been saying often that she understands and feels the pain the people are going through. It sounded hollow before, and now it sounds like a huge doughnut.
Dr. Phillips is clearly a lover of The Gap Band and their brand of funk. Read their lyrics:
You took my money, you took my time
Made me think everything was fine
Then you upped and ran away
And made me just go crazy
What options will that leave many people? At a quick guess, at least one very obvious one. Force persons to withdraw large sums and pay for whatever they can in cash, because all forms of electronic banking are covered. There is usually only so much that people will take calmly. Only so much.
I do not drink alcohol, but I may be interested in getting a slug of that overproof white rum that is not going to be taxed further.