Budget Debate: GCT chop among $18 billion in tax cuts
Finance Minister Nigel Clarke opened the Budget Debate on Tuesday.
The Government has announced a 1.5 percentage point cut in the General Consumption Tax (GCT) from 16.5 per cent to 15 per cent effective April 1.
The announcement was made on Tuesday by Finance and Public Service Minister Dr Nigel Clarke, as he opened the 2020/21 Budget Debate in the House of Representatives.
Clarke said the cut in the GCT rate will cost the government approximately $14 billion in revenue. It was part of the overall $18 billion in tax breaks announced by Clarke, who was delivering his second budget presentation as finance minister.
He said this was the first ever cut in the GCT rate without the tax simultaneously being applied to some other area.
“A cut in the rate of the GCT will make a big difference, it will leave more disposable income in the economy, and will boost economic activity which will benefit all households and firms,” Clarke said.
“By reducing the GCT taxes that all Jamaicans pay and allowing Jamaicans to keep more of their hard earned money in their pocket, Jamaica is moving up and moving in the right direction,” Clarke added.
He said this was the government’s way of giving back to the people as the economy continues to improve, even as he also pointed to initiatives aimed at boosting the Micro, Small and Medium-sized (MSME) sector.
“Effective calendar year 2020, we introduced for the very first time in Jamaica, the MSME tax credit that will provide a tax credit of $375,000 to every MSME business that files taxes in Jamaica,” Clarke said.
And, as part of what he said was a needed stimulus package, the minister announced that the asset tax will be reduced by 50 per cent from 0.25 per cent to .125 per cent “effective in the next assessment year”.
Exuding confidence, and repeatedly stating that Jamaica was moving up and in the right direction as his government colleagues applauded and repeatedly beat their desks, Clarke also announced that the primary surplus target will be lowered by 1.1 per cent of Gross Domestic Product to 5.4 per cent thus freeing up $25 billion in fiscal space. Additionally, Clarke said Jamaica’s debt to GDP ratio is projected to fall to less than 84 per cent of GDP in the upcoming financial year.
Opposition Leader Dr Peter Phillips, who was inside Gordon House as Clarke spoke for nearly four hours, had repeatedly urged the Government to cut the GCT rate by two percentage points to ease what he said was the economic burden being faced by many Jamaicans.