SCA Commentary: Growth atop the Shoulders of Fiscal Discipline

March 20, 2024, the Prime Minister (the PM), the Honourable Dr. Andrew Holness, made his contribution to the National Budget Debate. While the presentation was broad in scope, touching on the government’s interpretation of their party’s stewardship versus their opponent’s, what especially teased SCA’s interest was the government’s reiteration of its proposed pillars for national growth, branded under the compelling acronym ASPIRE.

ASPIRE stands for:

·       A – Access to Economic Opportunity for All (Inclusive Growth)

·       S – Safety and Security

·       P – People and our focus on Human Capital Development

·       I – Infrastructure Development

·       R – Reform of the Bureaucracy to Improve Ease, Speed, and Cost of Doing Business

·       E – Economic Diversification

The above framework, according to the PM, underpins the government’s strategic pivot toward inclusive, sustainable growth—and it was encouraging to hear that tax reform is a central tool in making this vision a reality.

Making the Tax System Work for Growth

The Prime Minister’s presentation made the tax measures previously outlined by the Minister of Finance far more digestible and actionable. Here's SCA’s breakdown and analysis of the key tax initiatives:

Four Tax Measures That We Wish to Emphasize

1. Increase in Tax-Free Pension and Age Relief (only affect individuals who are sixty-five years and older and or in receipt of a pension)

   • Will move from J$250,000 to J$350,000 each per annum by 2026/27.

   • For clarity if the individual is only receipt of a pension and not yet fifty-five years, that individual will have $350,000 of his/her pension income alone exempt from income tax. But if the pensioner is at least sixty-five years old, the $350,000 exemption may be applied to his/hers other sources of income as well.

   • If the individual is a golden ager (sixty-five years or older) but not in receipt of a pension, he will benefit from $350,000 of personal income tax exemption. However, if the individual is both a pensioner and golden ager, their additional tax exemption will be $700,000 per year.

   • This is a well-deserved relief for golden agers and pensioners, although the precise implementation timeline could be made clearer.

   
   

2. Zero-Rated GCT on Agricultural Seeds

   • This is appositive step move supports our farmers by lowering input costs and improving food security. We await an effective date for full clarity. We would also like to hear about the impact on customs duty.

   
   

3. Expanded Motor Vehicle 20% Duty Concessions

   • Previously extended to pickup trucks but now expanded to include panel vans for farmers.

   • Registered fishers are also now eligible.

   • The duty concession will be to limit the customs duty to no more than 20% of the CIF value of these vehicles, instead of the otherwise higher rates of duty which would apply.

   • These changes enhance productivity and ease of doing business in the agriculture and fisheries sectors.

   
   

4. Revamped GCT on Residential Electricity (Effective May 1, 2025)

   • GCT reduced from 15% to 7% on consumption above 150kwh per month.

   • GCT increased from 0% to 7% on consumption at or below 150kwh per month.

   • A 10% rebate for households consuming ≤250kwh/month.

   • This is a well-thought-out measure that could incentivize energy conservation and adoption of solar, easing pressure on the national grid. We had criticised it before because our previous understanding was that it would have been a 7% rebate on all charges up to 250kwh per month, but now we understand that the rebate will only be applied if total consumption is below 250kwh per month.

💡 Additional Measures Being Contemplated

• Urban Renewal Tax Relief Expansion (Coming Soon)

  • Will apply to areas such as Downtown Kingston, Central Kingston, Lucea, Caymanas, Negril, and Morant Bay.

  • Incentives include:

    • Tax-free rental income (if earned from unrelated parties)

    • Reduced transfer tax, stamp duty, and property tax

    • Accelerated capital allowances.

  • The implementation of this measure caused improvement in the past but never delivered sufficient improvements in the areas targeted. Downtown Kingston is still littered with more than desirable derelict buildings and images of depression. The government needs to consider having a SWOT analysis done before renewal of this measure to see what needs to be changed for more effectiveness.

  
  

• Transferable Tax Credits

  • The government will remove restrictions on tax credits being passed from one person to another.

  • This could increase flexibility and unlock greater investment potential in urban and mixed-use developments.

💡 What is Missing

• Removing the excessive tax on scale or even the introduction of more rewards for scale

  • We heard a lot of measures for individuals and focused attention on MSME’s, but in our opinion significant national growth will not be driven at the individual level, but by the efficiencies associated with large scale operations and collaborations.

  • The largest businesses in the country are regulated entities, including financial institutions which are being excessively taxed at over 33%, while other companies are benefiting from effective tax rates of as low as 17.5%. This gap is very excessive, and when compared to the rest of the world, is making it harder for an industry which could be the countries’ golden goose to be competitive.

  • Both the government and the opposition missed the opportunity to really Father what may be the countries’ best opportunity for serious growth. The effort to exact more from the largest only results in them being less competitive, while retaining barriers to entry.

💬 Final Thoughts from SCA

We commend the government's ASPIRE-ations and its focus on a more predictable, growth-aligned tax environment. The absence of new taxes, alongside targeted relief and reforms, signals a strong commitment to making Jamaica’s economy more business-friendly, especially for micro, small, and medium-sized enterprises.

One way SCA believes the tax reform programs of the government could improve is if in addition to the repeated focus of small-scale operations and or MSMEs, there is a focus on large scale businesses which can more meaningfully drive efficiency and growth.

We also welcome the nuanced reforms to energy-related taxes and the thoughtful incentives for urban renewal and creative industries.

That said, aligning major implementation dates with standard tax cycles (e.g., the calendar year for personal income tax) would go a long way in reducing administrative burden and confusion for taxpayers and advisors alike.

Overall, the Prime Minister’s message was clear: economic resilience is here—and growth is next. At SCA, we’re ready to help you navigate these changes and seize the opportunities ahead.

SCA_Budget_Commentary_Mar_2025.pdf

Download PDF • 4.83MB