The tax which is to take effect on April 3 and rake in $1.88 billion in revenue, was announced by Finance Minister Audley Shaw during his Budget Presentation on Thursday.
Byles the former EPOC Co-Chair, declared it an "unfortunate" move by the Government and will result in employees and their companies paying more for group health insurance.
Speaking on Radio Jamaica (RJR) Friday, Mr. Byles said only 30 per cent of Jamaica's work force had health insurance and the tax could result in a reduction of that figure. "Many small and medium sized companies who are currently struggling to give their employees health insurance are going to say, well, I either have to reduce those benefits dramatically or stop giving insurance," he asserted.
According to Mr. Byles, health insurance costs move faster than inflation, so adding GCT will create more challenges. "Medical inflation tends to run a little faster than ordinary inflation because a lot the inputs have to do with foreign currency. The person who has health insurance today has to deal with the normal inflation impact of medical insurance, which may be, in our experience, in the region of anywhere from five per cent at the low end, to 25 per cent at the high end, and now, on top of that, they have to pay GCT."
"A service like this is good. Why tax it?" the Sagicor Group CEO questioned, arguing that the tax on group health insurance should be neither morally nor socially acceptable, since health insurance is something persons are encouraged to get.
"It's going to be a shared cost between the company and the employee. Sure, it puts pressure on the product. It's just like any other product. If the price goes up, selling it is that much harder, so a product that is 16.5 per cent more expensive must be under a little pressure. I wish we could have closed the deficit some other way because it costs that individual worker who is taking the bus or taxi to work or buying gas to come to work. It hits them hard."
The increased costs are to be reflected on monthly premiums with Sagicor to collect and remit to the Government.
Finance Minister Audley Shaw disclosed during the opening of the 2017-18 Budget Debate that the Government was seeking $1.9 billion in revenue from group health insurance.
- Countries: Jamaica