KINGSTON , Jamaica – Finance Minister Dr. Nigel Clarke has announced that no new taxes will be implemented to fund the Government’s JM $1 trillion (JM $1 = U.S. $0.008 cents) budget for 2023-2024.
In opening the Budget Debate in Parliament on Tuesday, Clarke indicated that 2023-24 represents the sixth consecutive fiscal year in which “we have not introduced any new taxes for the people of Jamaica” and the eighth year “where we have had no new net taxes.”
He said that other methods will be used to stimulate economic activity, these include changes to the tax policy for horse racing, energy commodities, and second sale motor vehicles, as well as the importation of breeding goats, sheep, and pigs.
“These policy changes… will likely generate substantially more and support domestic economic activity,” he said.
He also announced that a new policy will be implemented in relation to second sale motor vehicles that will see sellers continuing to pay a flat fee of $12,000 or $18,000.
In addition, registered motor vehicle dealers will pay a rate of 15 per cent general consumption tax (GCT) on the mark-up margin, rather than the full price.
Concerning Income Tax Act, Clarke said that it will be amended to incentivize householders purchasing solar photovoltaic systems, as part of efforts to reduce energy costs.
This will facilitate the Government’s provision of income tax credits equivalent to 30 per cent of the purchase price, up to a maximum cost of $4 million.
Clarke said these activities are being undertaken “because we are committed to not only preserving our economic recovery, but to increasing it and, more importantly, to share the gains with the people of Jamaica.”
“We believe in Jamaica. We believe and support the people of Jamaica. We are firmly committed to providing the economic environment and resources necessary to ensure that the people of Jamaica grow and prosper.
“Importantly, as we experience gains from economic reform and economic recovery, this Government has shown that we will continue to share those gains with the people of Jamaica,” the finance minister noted.
In addition, funds for the 2023-24 Budget are allocated across the main expenditure categories.
These comprise non-debt recurrent expenditure of $665.7 billion, capital expenditure of $75.3 billion, and debt servicing of $280.6 billion.
Central Government revenue and grant inflows are estimated at $897.6 billion, which, alongside the above-the-line expenditure of $887.7 billion, will generate the required fiscal balance surplus of $9.9 billion or 0.3 per cent of gross domestic product (GDP), consistent with fiscal rules.
The Finance Minister also disclosed that Minister of Labour and Social Security, Karl Samuda, will announce an increase in the minimum wage in April.
Clarke noted that the Government has always prioritized the lives of the Jamaican people, with a view to improving their living standards and to allow them to lead more meaningful lives.
“As such, the last increase under the minimum wage in 2022 was the single largest increase in the entire history of the Minimum Wage Act, moving from $7,000 to $9,000, an increase of 29 per cent,” he stated.
The Minister noted that as the minimum wage was changed only one year ago, many minimum wage earners are concerned as to whether they will have to wait a year or two years for another increase.
“We know that times are tough, and we know in today’s Jamaica that though there was an increase just a year ago, that $9,000 is an insufficient amount to live on in Jamaica, especially after the inflation shock last year,” Clarke said, adding that the Minister is seized of this.
Mr. Samuda advised the Standing Finance Committee on March 2, that the report from the National Minimum Wage Advisory Council had been submitted to him.
“The Minister of Labour is the only person, by law and by convention, who announces the new rate of Minimum Wage. As such, he will announce the rate…, and when he does so, he will have the concurrence of the Cabinet. Minimum wage earners can look forward to a meaningful increase.”
The Finance Minister also disclosed that the Holness led administration will continue to support the growth of a local film, television, and animation industry.
He said the Government will be establishing a $1-billion Jamaica Screen Fund to provide financing for the development and production of film and television (TV) shows in the country. The Fund will be established in partnership with the Ministry of Industry, Investment and Commerce.
The fiancé minister said that the $1 billion, which is an initial amount, will be provided over two years, with $500 million in 2023/24.
He said that the Fund will enable creatives to devote time and sweat equity to developing their projects to the point where they can receive financing. This includes, writing a feature script or a TV series pilot script, producing a short film as proof of concept, or producing a teaser video as proof of concept for animation..
Clarke added that the Jamaica Screen Fund will also support production of films locally by providing a defined percentage of the production costs up to a maximum contribution for local productions, with other percentages and thresholds for foreign films being shot in Jamaica once certain criteria are met.
In the coming weeks Portfolio Minister, Aubyn Hill, will publish the rules of the Jamaica Screen Fund, along with guidance on how to access grants and financing, inclusive of what is expected of writers, creatives, and production companies, which receive support.
Clarke explained that the resources for the Fund will remain with the Ministry of Finance and the Public Service to be drawn down in tranches once the Ministry of Industry, Investment and Commerce approves eligible projects that have completed and fulfilled the application requirements.
“Hundreds of persons can be employed in a single production for months at a time. In addition, the production of film and television generates indirect and spin-off economic impact through the provision of goods and services required and spending in the local economy,” Clarke pointed out. Meanwhile, thousands of contract workers in the public sector, including sanitation workers, cooks and watchmen in the primary school system, are to receive permanent employment status, starting in the 2023-24 fiscal year.
The Finance minister said the government is moving to make good on its promise to address the decades-old practice in the sector, which barred that category of worker from pension and other critical benefits over the years.
He said the work is to begin with 8,522 contract workers at the Ministry of Education, including 716 cooks and 52 assistant cooks in the primary school system, 367 watchmen, and 659 caregivers in infant schools.
He advised that an audit of employment in the education ministry showed that 636 out of 4,460 vacant posts have been recommended to be abolished. Cooks at the primary level are usually engaged on contracts and only work when schools are in session, leaving them ineligible for pension even after up to 20 years of service.
Overall, Clarke said that he is pleased that due to the prudent policies of the government, lwe were not only able to survive the pandemic but, like only a hand full of countries around the world, we have thrived.”
“Economic output has returned to pre-pandemic levels, unemployment has fallen to pre-pandemic levels, and so has Jamaica’s debt level. Jamaica is poised to be the breakout country of the third decade of the 21st century,” he said.
