Government planning to tax churches, charities?
ELIMINATING discretionary waivers altogether could return $4 billion in revenue to the Government.
But the tax breaks, which are approved after applications are considered by the finance ministry, mostly go to charitable organisations, while public sector bodies and government contracts take up a significant portion of the rest.
What’s more, with a targeted primary surplus of 7.5 per cent of GDP, or approximately $100 billion next fiscal year, the possible savings hardly dent a $20 billion to $40 billion shortfall.
Even then, Finance Minister Phillips said that “concrete steps” towards getting rid of the tax benefit will have to be taken before it can go to the International Monetary Fund’s (IMF) board for an agreement.
“We have to intensify our tax reform efforts and, in particular, virtually eliminate discretionary waivers whilst strengthening the tax administration department,” he said in a pre-recorded speech, which was broadcasted Monday night.
It is not clear how beneficiaries, such as churches, may be affected by the elimination of waivers, but Phillips said that a new Charities Act will be passed to bolster reform measures.
Of the $3.6 billion in approved discretionary waivers during the seven months to October 2012, 47 per cent went to charitable organisations, 37 per cent to government institutions and another six per cent went to contracts.
Similarly, for the 2011/2012 fiscal year, which ended March 31, 2012, 58 per cent of the $4.1 billion in waivers went to charities, and another 15 per cent went to government-related services.
A large part of the waivers related to government services had to do with the importation of vehicles by agencies such as the Jamaica Urban Transit Company (JUTC).
While the charities, such as Food for the Poor, would get the pass on taxes related to importation of essential items, such as food, pharmaceuticals, medical supplies, school supplies, books, and furniture.
“Among the structural reforms being undertaken, public sector transformation is an urgent priority in order to ensure greater efficiency and cost-effectiveness in the public sector,” he said.
The Government also plans to implement another debt exchange, pass public debt management legislation, enact a new Omnibus Incentives Act, as well as an amended Revenue Administration Act, and secure a public sector wage contract before going to the IMF’s board.
