The Jamaica Chamber of Commerce (JCC) has expressed dismay at the $21-billion tax package announced by Government on Thursday evening.

In a statement issued Sunday, before Prime Minister Bruce Golding announced there would be a review of the proposed tax package, JCC President Milton Samuda said it appeared that the need to raise revenue had once again triumphed over any planned prospect of tax reform.

The statement reads as follows.

Whilst we understand that an increase in taxes may be necessary to close the budget gap, combining an increase in the rate of General Consumption Tax (GCT) with a major reduction in the number of GCT-exempt items appears excessive and, possibly, counter productive, when GCT and other consumption taxes are already underperforming due to our weak economy. Moreover, it requires an extremely strong and effective expenditure programme to help the weakest in society, which it is not clear that we yet have.

We would suggest that if the intention is to substantially widen the base of items subject to GCT, as proposed in the package, then one should reduce the rate of GCT to a more palatable 15 per cent. The higher the rate of GCT, the greater the pressure on our poor, the greater the incentive for avoidance, and the greater the suppression of the consumption necessary for the survival of businesses of all sizes.

Counterproductive

Attempting to tax items such as ground produce, in addition to being antithetical to 'Buy Jamaican' exhortations, may be counterproductive because of the difficulties we foresee in implementation.

The proposed tax on electricity appears to be set at too low a level of consumption, and will be a particular hardship to the middle class.

Another concern is why the refinancing programme was not able to be announced at the same time as the tax package.

The JCC is calling for the Government to put in place the strongest possible team of macroeconomic, tax and debt advisers immediately. The need for technical expertise and support is gravely obvious.

There is also a strong need for consultation with stakeholders, through the partnership process, on the proposed tax package and its implementation.

Finally, the Government must seek, simultaneously, to stimulate the economy towards robust growth or risk economic stagnation. In that regard, all ideas must be considered and the JCC will make itself available for the necessary discussions with Government and other stakeholders.

'Attempting to tax items such as ground produce, in addition to being antithetical to 'Buy Jamaican' exhortations, may be counterproductive because of the difficulties we foresee in implementation.'