Financial sector strongly against levy on withdrawals

The Jamaica Bankers Association (JBA) has come out strongly against the government's decision to impose a levy on withdrawals within the financial sector.

  

The JBA on Wednesday issued a statement calling for the government to employ what it characterised as a more prudent and equitable strategy, including strengthening efforts to increase tax compliance.

    

The bankers said they were concerned that the government has not presented a more equitable and sustainable strategy to meet the $6.7 billion shortfall in revenue for the 2014/2015 fiscal year, arguing that "the levy may discourage some individuals and businesses from utilizing the formal banking system"

   

According to the JBA, this not only conflicts with the country’s aim to achieve greater financial inclusion, but encourages greater activities in the informal economy.

 

The bankers said they were also concerned about the government’s decision "to raise an additional $1.7 billion by increasing the asset tax for deposit-taking entities regulated by the Bank of Jamaica.

  

According to the bankers, the solution cannot be to impose repeated and increasing demands on the financial sector that is the most compliant and one of the largest contributors to tax revenues, arguing that, as it stands, financial institutions are "already subject to a higher rate of corporate income tax compared to other companies.

  

The JBA also highlighted the contribution the financial sector made in previous financial years by supporting the government’s debt reduction strategy through the Jamaica Debt Exchange and the National Debt Exchange.

 

 

The Jamaica Securities Dealers Association has also registered its opposition to the levy.

    

In a statement on Wednesday evening, the Securities dealers urged the government to reconsider the measure, arguing that it will have a negagtive impact on the country's capital market.

   

Julian Mair, President of the Association, speaking on RJR's Beyond the Headlines, also made it clear that the levy will be passed on to the customers of financial institutions.