Opposition has doubts about tax collection

Doubts have been raised by the Opposition that the government will be able to collect nearly a quarter of the total taxes it levied last week.

Opposition Spokesman on Finance Audley Shaw says it is unlikely that the government will be able to collect the tax it has announced, on overseas calls terminating in Jamaica.

Minister of Finance Dr. Peter Phillips has proposed a US 7.5 ¢ tax on each overseas call received or terminating in Jamaica.

The measures to affect the telecoms industry,  including a tax of 30 ¢ on  each local call, was projected by Dr. Phillips to bring in more than $5 b in the $20 b tax package he announced last week.

Mr. Shaw said he doubted that the government would be able to collect the tax, and that even if it were able to collect the tax, it would hurt the local telecommunications companies.

Mr. Shaw said the profits to the telecoms industry would be taken away and put to government use, instead of to investment in broadband technology.

He said the government would have to overcome some legal and constitutional barriers to be able to collect the tax. He said the tax on calls originating elsewhere and terminating in Jamaica was, in effect, a tax on people elsewhere.

The Opposition Speaker said the US authorities had telecoms regulator had challenged a similar tax of US 2 ¢ and US 3 ¢ per call that was charged by the former PNP administration but that went to the Universal Access Fund. That tax did not go to general revenue, he said, but to E-Learning and specific technology programmes.

Mr. Shaw said the government was unlikely to be able to collect the money and the telecoms and phone companies invested in Jamaica would lose, as their receipts would go down, their investment would be reduced and Jamaica would lose. He said even the call centre business could be destroyed.

The proposed tax would not increase payments by phone users who already pay 25 % tax on calls and 20 % for some telephone supplies.

Meanwhile, Opposition Spokesman on Finance, Audley Shaw has accused the government of what he calls betrayal of the people, for not removing the General Consumption Tax from electricity.

During his contribution to the 2012-2013 Budget Debate today (May 29) Mr. Shaw accused Prime Minister Portia Simpson Miller, of breaking an election promise.

He pointed out that the government was now going to raise additional funds on the tax.

While in Opposition, Mrs. Simpson Miller, as part of the PNP’s campaign, promised to remove GCT from electricity, if elected to government.

However, last week, Finance Minister Peter Phillips announced that the ceiling at which GCT would be charged would be lifted.

This from 200 kw/hr to 300 kw/ hr, a month.

The rate of the tax will now increase to 16.5 %, up from 10 %.

Mr. Shaw points out that while some residential customers may be spared, this will have a negative impact on small business operators

He sees this move as destructive and deceptive, coming from a government that promised to remove GCT on electricity.

He says this move was just a promise to win an election.