Making the announcement in the House of Representatives today (March 17), Minister of Finance and the Public Service, Dr. Nigel Clarke, said the banking sector has agreed to forgo the reduction in asset tax announced recently for one year.
He disclosed that the move will add $3 billion to the $7 billion COVID-19 Contingency Fund.
The reduction in asset tax would have taken effect April 1.
“The asset tax is a tax on consumers and not good for monetary transmission. However, given the impact of the measures taken to protect the health of the Jamaican people, we will be accelerating the intervention and deploying it directly to those who need it most. The Fiscal Contingency is just that. It is a contingency and not a commitment to spend,” he said.
He further disclosed that the Government is implementing and considering further fiscal action to cushion the economic impact of COVID-19.
The measures include a waiver on the special consumption tax on approximately 100,000 litres of alcohol for use in the making of sanitisers. He said it will be donated to the National Health Fund and Ministry of Health and Wellness, adding that it will ensure that sanitisers remain available in Jamaica.
“We will also waive Customs Duty on the importation of masks, gloves, hand sanitisers and liquid hand soap for a 90-day period,” he said.
He said measures are also being put in place to allow remote work in the business process outsourcing (BPO) sector.
“Under normal circumstances, Customs requires BPO firms to keep the equipment used in their operations, from which they get special inbond treatment, physically at their place of business, so if the equipment is physically there, working from home is not easily facilitated, so what we have done is we will be waiving this requirement… for a specific period,” he said.
Dr. Clarke said discussions are under way for commercial banks to provide temporary cash flow support to businesses and consumers in affected sectors through deferral of principal payments, new lines of credit and other measures.
“Various banks are implementing various forms of these interventions on their own, with their own customers,” he added.
He said the COVID Allocation of Resources for Employees (CARE) programme will also be introduced to support businesses keeping persons employed in target sectors and provide temporary cash transfers to persons who can verify that they lost employment due to events surrounding the local confirmation of COVID-19.
Dr. Clarke noted that it will also focus on a special soft-loan fund to assist individuals and businesses that have been hard hit, and supporting the poor and vulnerable with special COVID-related grants.
“We are finalising details on the implementation and accountability mechanisms for these programmes, the specific amounts involved, and I will speak to those next Tuesday,” he added.
Meanwhile, Dr. Clarke said the COVID-19 contingency fund is part of the wider $25-billion stimulus package.
“Pumping $25 billion in the economy at a time of uncertainty like this helps to support economic activity in Jamaica, which is always desirable when the global environment weakens. The reduction in GCT by 1.5 per cent from 16.5 per cent to 15 per cent puts $14 billion back in the hands of the consumers and supports consumption,” he said.
He added that the $1-billion micro, small and medium-sized enterprise (MSME) tax credit provides a critical cash flow support to MSMEs and the dramatic reduction in regulatory fees to coconut, coffee, cocoa and spiced farmers incentivises greater production.
“In this time of need for the country, it is also important that Jamaicans support our local economy by buying Jamaican. “This will enhance the effects of these measures even further by supporting domestic production and domestic economic activity,” he said.
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