Shaw Retracts Some Jamaican Budget Tax Hike Proposals

by Phillip Morton, Investors Offshore.com

13 May 2009

Jamaican Finance Minister Audley Shaw presented amendments to Jamaica’s budget on May 6. The second draft of the budget tackles Jamaica’s rising national debt, which has leapt to 130% of GDP this year.

Shaw’s earlier bill envisaged increasing the scope of its General Consumption Tax (GCT) to include imported printed material, salt, rolled oats, syrup, soups, petroleum, diesel and lubricating oil for fishing.

After criticism, as well as protests over fuel tax increases, the government has decided to retract many of its proposals in favour of raising taxation on cigarettes and alcohol, which are taxed under Jamaica’s Special Consumption Tax (SCT).

Within the government’s SCT hike, tax on cigarettes will be increased to JMD8,500 (USD95) per 1,000 from JMD6,000 (USD67.5). Taxation on beer and the majority of spirits will be levied at a 25% rate, tax on white over-proof rum however will retain the higher rate of 30%. Both the tax hike on alcohol and cigarettes entered in force with immediate effect.

Although the majority of the government’s GCT proposals have been retracted, tax on foreign newspapers as well as imported computers will remain, albeit computers for educational institutions will be granted waivers.

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