JAMAICA – Finance Minister Dr. Omar Davies has postponed by two months, the implementation of a new tax package for the tourism sector.
He made the announcement while closing the 2005/2005 Budget Debate in the House of Representatives.
The legislature approved a $347 billion spending package supported by new taxes of $9.4 billion, according to the Jamaica Gleaner.
“The Minister of Tourism (Aloun Assamba) and myself had an initial meeting with the sector,” he said.
“I have been struck by some concerns raised about the possible repercussion to the take-home pay of the workers resulting from the change in the categorisation of their allowances.”
As a result, he said, the changes in terms of the treatment of the sector originally targeted for May 1 are going to be postponed to July 1.
The Finance Minister also responded to public concerns raised about the cost of escalation at the Sandals Whitehouse hotel project.
“I have asked for a complete comprehensive report indicating the rationale between the original projected cost and what will be the final out-turn,” he said. Originally estimated to cost US$74 million (J$4.6 billion), the Government-backed project is now expected to be completed for US$105 million (J$6.5 billion).
A May 31 deadline has been set for the report, which he said would be forwarded to Parliament.
Based on the first phase of a major tax reform plan, the new tourism taxes are a key element in the overall programme to give the country a fully funded budget.
The new tax measures he had presented on April 14 required the capping of commissions at 15 per cent of gross income. It had also capped gratuities at five per cent of gross income.
Additionally, the Government had proposed raising the General Consumption Tax rate applicable to the sector to 8.25 per cent from 6.25 per cent along with other measures intended to raise $607 million.
The result has been an impassioned response from workers and hoteliers. Jamaica Hotel and Tourism Association (JHTA) president Godfrey Dyer said recently, “It is going to be very tough on us.”
Dr. Davies said yesterday, “We are giving ourselves an additional two months in which to come to an agreement in terms of those measures we implement as of July 1.”
Another issue having a major impact on the country’s finances is the restructuring of the recently re-nationalised Air Jamaica.
Accounts for the period January to March show that losses for the period amount to US$30 million (J$1.8 billion).
“Although some drastic action will have to be taken, the administration is fully committed to maintaining our national airline within the context of a maximum subsidy of US$30 million (J$1.8 billion) per year,” the Finance Minister noted.
The public, he said, will get to see a comprehensive report and business plan for the airline once it has been approved by the Cabinet and becomes available.