Phillips reacts to IMF’s approval of government’s tax plan

Dr. Peter Phillips, Opposition Spokesman on Finance, has reacted to statements that the International Monetary Fund (IMF) approved the government's tax plan recently tabled in the House of Representatives. IMF Mission Chief Dr. Uma Ramakrishnan, on Friday, described the plan as bold and essential. She also endorsed the 2016/2017 Budget, saying it is in keeping with the targets set out in the Economic Reform Programme.

However, addressing a divisional conference for the Knockpatrick division in Manchester Sunday evening, Dr. Phillips said the government had to eventually table a $13 billion tax package to sustain the personal income tax plan.

 “Now what that means is that the original plan which was to give away and cause the debt to climb too massively because they were giving up revenue, that that couldn’t work and that the government finally came to its senses, so they took the bold decision to institute some taxes which they said they wouldn’t do and (the taxes were) bold and essential, meaning absolutely necessary - if you never do it, we would not pass the thing at all!” he said, seeking to explain the IMF Mission Chief’s description of the government’s tax package as 'bold and essential.'

Meanwhile, Dr. Phillips believes that the poor and vulnerable will be seriously affected, despite the IMF's request that measures be put in place to protect them before the full $1.5 million increase in the income tax threshold is implemented in April.

He says what the IMF has not indicated is that these individuals will begin to feel the effects when the first phase of the tax plan goes into effect on July 1.

 “The first step (has) put the poorest set of people in the country facing higher cost for taxi fare, for transport, for gas, for electricity, in order not to benefit many because the people who benefit from the $2000 a week or $8000 a month are themselves facing those prices and probably will be paying more than the benefit that they get. That is what the Civil Service Association said - that many of their workers will, in fact, be worse off,” he said.