JLP: PNP tax relief plan impossible to be implemented in first year

By: Kimone Francis

Image caption: Fayval Williams, minister of finance and the public services, taking part in a Jamaica Labour Party press conference at the party’s Belmont Road, St Andrew headquarters yesterday.

The Jamaica Labour Party (JLP) says its income tax plan will cost the country significantly less than the People’s National Party’s (PNP) plan, indicating a $28 billion to $44 billion price tag, compared to $75 billion to $90 billion.

The party also said its income tax relief to seniors is estimated to cost $12 billion to $14 billion of the aforementioned figure.

Speaking at a JLP media briefing on Wednesday, Finance Minister Fayval Williams said the PNP’s proposal to raise the income tax threshold to $3.5 million, up from $1.8 million, is a desperate attempt to grab power.

According to Williams, if implemented in the 2026-27 fiscal year, it will bring Jamaica to financial ruin.

“If they seek to do it anytime soon, it would bust the Budget and it would destroy the hard work and collective sacrifice of every Jamaican over the years,” said Williams. “It would be taking us back to massive taxation, public-sector wage freeze and increased borrowing, which would lead to high and unsustainable debt.”

The JLP is proposing to gradually cut the 25 per cent tax on annual earnings by 10 percentage points to a 15 per cent base rate over time.

Williams said this will be done in a “fair, phased and disciplined approach”, calling this fiscally responsible.

“Theirs is $75 billion to $80 billion, and ours will be $28 billion to $44 billion when we roll in the seniors. The $44 billion is just us being overly conservative. The phasing of theirs is non-proposed. They will make the Jamaican voters think that it is going to be in year one ... . It is impossible to be implemented in the first year,” Williams cautioned.

“It would cause so much damage that we would be back to where we were 10-15 years ago,” she said.

Economist Keenan Falconer has theorised that the income tax plans by the JLP and PNP are not expected to be implemented before the 2027-2028 fiscal year.

He said this is because the current fiscal profile of the country indicates that Jamaica is projected to run a fiscal deficit of nearly one per cent, or $33 billion to $35 billion, in each of the next two fiscal years.

TACKLE INCOME TAX FIRST

However, economist Dr Damien King, in a radio interview, indicated that it is unlikely either party would implement its plan at a rate that leads the country towards fiscal deficit and back to rising public debt.

He said that given Jamaica’s economical structure and the existing horizontal inequity, it is more efficient to get more people off the income tax roll entirely.

He said this minimises inequity and the likelihood of two people earning the same salary with only one paying Pay As You Earn tax.

King said Jamaica’s fiscal framework does not allow the running of a large fiscal deficit. He said both parties will have to answer where the make up for the revenue shortfall will come from.

He said once the Budget adjustment is balanced, the income tax-reduction route taken is immaterial.

At the briefing, Williams said the PNP’s proposal to fund its plan through economic growth is not feasible, because this would require a rate of 8.5 to nine per cent of additional GDP growth to implement in one year.

She said the JLP’s plan requires 1.4 per cent additional growth.

“When you look at our manifesto, the growth initiatives that are in there will get us beyond that 1.4 per cent, if that’s how we choose to do it,” she said.

Williams said if that route is not being pursued, the second option would be through an increase in other taxes.

She said the budgeted tax revenue for 2026-27 is approximately $1 trillion. She said the percentage increase required to fund the PNP’s plan would be eight per cent. For the JLP, she noted that it would be 1.3 per cent.

A third option, Williams said, is financing through expenditure cuts. She said wages and salaries, debt servicing and programmes would have to take a cut.

She said the percentage cut required would be approximately 18 to 19 per cent for the PNP’s plan, and for the JLP’s, it would require approximately three per cent.

“But we’re not advocating that, obviously,” she said.

“So, you can see, we have done our analysis. You have seen the experience of this Jamaica Labour Party in government. You have seen that we’ve been fiscally responsible ... ,” she said.

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