Monday 30 March, 2020

Stimulus funds not intended to subsidise profits, says Clarke

Minister of Finance and the Public Service Dr Nigel Clarke

Minister of Finance and the Public Service Dr Nigel Clarke

Minister of Finance and the Public Service, Dr Nigel Clarke says the $10 billion budgeted to support the economy during the period in which businesses are affected by the novel coronavirus (COVID-19) is not “intended to subsidize profits.”

Support measures announced by the government include a new Business Employee Support and Transfer of Cash (BEST Cash), which will provide temporary cash transfers to registered businesses operating in the hotel, tours, and attraction companies.

These operators in the tourism industry who are licensed with the Jamaica Tourist Board, and will receive the transfers based on the number of workers they keep employed. The workers should fall under the income tax threshold of $1.5 million.

In his closing 2020-2021 Budget Presentation on Tuesday, Clarke said: “we will subsidise people but it is not reasonable to expect the government to subsidise profits.”

He noted that people, businesses and the government will experience losses from the pandemic and it is the government’s first priority “to protect the neediest people from the worst effects of this COVID-19 crisis.”

At the same time, he noted, the public interest is served by “doing all we can to maintain productive capacity, which if lost takes years to rebuild.”

Clarke said he expected “those with personal and corporate reserves, who operate businesses that are affected by the effects of the pandemic to put those reserves to work.”

He noted that, to the extent that conditions deteriorate the government will favour market-based solutions.

“The government will not put taxpayer dollars at risk without the prospect of a commensurate return. If it is necessary for the government to invest we will invest with the view of making a return,” Clarke stated.

The fiscal stimulus package is inclusive of a COVID-19 Allocation of Resources for Employees (CARE) programme principally designed for waiters, waitresses, bartenders, gardeners, room attendants, drivers, caregivers, security guards, office attendants and clerks among other categories of workers “who are the backbone of our hotel, attraction, tour, restaurant industry.”

Clarke, stating that this is a tough time for tourism said business in the sector will need to apply for BEST Cash by filling out the required form online.

Businesses would then file and pay their payroll returns as usual on the 15th of April, May and June.

For each employee, with taxable income that is less than $1.5 million on whose behalf statutory returns are applied, the government will transfer funds at a rate of $9,000 per fortnight to that tourism-related business, by direct transfer to their bank account, paid monthly.

For the months of April, May and June that will equate to $54,000 for each employee.

It is the first direct transfer of its kind in Jamaica.

Another assistance programme is the Supporting Employees with Transfer of Cash (SET Cash) – which will provide temporary cash transfers to individuals where it can be verified that they lost their employment since March 10,

Employees will be required to apply by filling out an application online.

Once the applicant is verified the file will be passed to the Accountant General and payment made electronically directly to the bank account of the applicant.

Applicants who are successfully verified will receive payment at the rate of $9,000 per fortnight, paid monthly from the start of application until June, provided that the application is made before the cut-off point for that month.

Providing that applications are made before the cut-off point in April, verified applicants will receive $54,000 by June 30.

SET Cash is directed towards individuals who earn below the income tax threshold of $1.5 million who constitute 80 per cent and who are most vulnerable to the effects of being suddenly laid off.

The government also plans to allocate $1.1 billion in additional funding to the Ministry of Labour and Social Security to be used to increase PATH Cash Grants paid during the period April – June by this amount.

The government will make an additional payment of a similar amount in May, which will have the effect of increasing by 50 per cent the amount the aggregate amount that PATH beneficiaries would have ordinarily received during this period of April - June.

As for small businesses, the finance minister noted that medium, small and micro businesses have been provided with a tax credit of $375,000.

Small businesses with sales of $50 million or less will be eligible for a one-time COVID Small Business grant of $100,000. They will be required to fill out a form online providing their banking information.

The government will also make $1.2 billion available in the form of grants to businesses operating in the tourism and related sectors.

The Ministry of Agriculture MICAF will be reallocating its budget to provide $200 million for relief to small farmers.

COVID-19 Compassionate Grants, which total $650 million are in addition to the $10 billion but will be financed by reallocations of existing budgets.

 

Get the latest local and international news straight to your mobile phone for free: