Tax on Bank Withdrawals! adminstush April 21, 2014 Special, Suss Tax on Bank Withdrawals! What do u think Fam #BadTax #GoodTax or #NoMoreTaxes? #1Dollaroffevery1000 #LiveSTUSH The Government is coming under increasing fire over the announced new tax to be imposed on withdrawals from deposit-taking institutions, starting June 1. Finance Minister Dr Peter Phillips announced the new tax as he opened the Budget Debate last Thursday, and said the measure was expected to gain $2.25 billion this fiscal year, which would provide the bulk of the $6.7 billion in new taxes which the Government is budgeting to collect. The tax will be calculated on a graduated rate system, with withdrawals less than $1 million being subject to a 0.1 per cent tax. This means that Jamaicans will pay $1 for every $1,000 they withdraw from deposit-taking institutions through electronic banking, point of sale transactions (debit cards), cheques, banking hall transactions, ABMs, ATMs, and Internet transfers. The only exception is Internet transfers made by a person between his accounts in the same financial institution. Persons withdrawing more than $20 million will have to pay a 0.05 per cent tax, while those withdrawing more than $5 million, but less than $20 million, will pay 0.075 per cent tax; and those taking $1 million to $5 million will pay 0.09 per cent tax. Since the announcement, more and more persons are demanding that the administration rethink the levy, while others want it removed. Opposition Spokesman on Finance Audley Shaw immediately called the move heartless, and yesterday told The Sunday Gleaner that a similar proposal was made to him in 2010 while he was finance minister and it were rejected outright. Bank charge study According to Shaw, when the suggestion came he ordered the Bank of Jamaica to do a study on bank charges, as at that time the European Union was very concerned about bank charges in the Eurozone. “It was a suggestion I rejected as a minister in 2010 because I believed then, as I do now, that it is just wrong,” said Shaw, as he argued that the bank fees faced by Jamaicans were already too high. “So regardless of what CaPRI (Caribbean Policy Research Institute) and the Bank of Jamaica come up with from their studies, you cannot have a straight line comparison with other countries because they are not suffering the same way we are suffering. “The comparisons with the United States and several countries in Europe and the Caribbean did not reflect a true picture as they have stable currencies, stable inflation rates and did not have electricity cost about to reach US$0.40 per kWh.” According to Shaw: “The Government is already taking interest on saving accounts. The Government has now joined with the banks to make the cost of doing business more expensive. It’s unfair, it’s unacceptable and we are not going to support it.” He was supported by president general of the Bustamante Industrial Trade Union, Senator Kavan Gayle, who argued that the new taxes now put an additional burden on those whose salaries fall below the income tax threshold. “It is the stupidest tax to be levied on defenceless people in a long time. We are powerless. We can’t do anything about it, because improved technologies have forced nearly all persons to use ATM cards to carry out transactions. What this means is that every time I do a transaction, it is a further erosion of disposable income,” Gayle told The Sunday Gleaner. Civic groups Jamaicans United for Sustainable Development and Citizens Action for Principle and Integrity have also urged the Government to rethink the tax. However, financial economist Dr Andre Haughton and financial analyst Dennis Chung have argued that the tax is not a bad one in the general scheme of things. “The new tax is not a bank fee, but a government fee, although it impacts your banking transactions. It’s not as significant as we think it is, but to some people, losing $10 from a transaction is significant,” said Haughton. “The bottom line is that we are looking at how to move the economy forward, the Government itself must find more creative ways to earn revenue, and they must tie up inefficiencies in the tax-collecting system,” suggested Haughton. Leave a Reply Cancel ReplyYour email address will not be published.CommentName* Email* Website Save my name, email, and website in this browser for the next time I comment. Notify me of follow-up comments by email. Notify me of new posts by email.