Jamaica Gleaner
Published: Wednesday | April 3, 2013
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Tax increased too soon - Conflicting documents lead to earlier introduction of education tax increase
 Anastasia Cunningham, News Coordinator

A discrepancy between two documents reportedly from the Ministry of Finance and Planning has led to some employers deducting the increased education tax one month earlier than was required.

The revenue measures for the 2013-2014 financial year announced in February by Finance Minister Dr Peter Phillips stated that, effective April 1, the education tax rate would be increased from three per cent to 3.5 per cent for employers and from two per cent to 2.25 per cent for employees and self-employed persons.

However, the policy note sent to employers reportedly from the finance ministry, dated February 6, 2013, stated that the implementation date was March 1 and the employers' contribution would increase from three per cent to 3.25 per cent.

INACCURATE NOTE SENT IN ERROR

Yesterday, the finance ministry, along with Tax Administration Jamaica (TAJ), acknowledged that the inaccurate policy note was sent out in error.

In response to a Gleaner query, a joint statement read: "Please be advised that the 'policy note' in question is not an official publication of the ministry but simply a working document developed as a basis for early discussions between TAJ and MOF Tax Policy Unit.

"Such discussions take place each year and lead eventually to the finalisation of rates and other issues in respect of the various policy items which are eventually included in the revenue measures. It is standard operating procedure to develop a series of such documents, each different from the preceding one, as discussion proceeds and ideas are exchanged. Such working documents are, for that reason, intended for internal use only."

The statement indicated that the policy note was inadvertently released to the public before the process of refinement, and approval of the policy was complete.

The final, approved version of the policy, the joint statement noted, in respect of this particular matter, was published as part of the annual revenue measures on February 12, 2013, for implementation on April 1, 2013.

TAJ advised employers who have started to collect the increased education tax to make the appropriate adjustments to offset amounts against current payments.

A source inside the finance ministry, who declined to be named, said checks were being made to determine how the policy note was released.

"Any official policy note sent out must be signed by the financial secretary and this was not signed. We are now checking to see how it was sent out in error and who sent it," the source said.

ADJUSTMENT MADE BY SOME

The Jamaica Employers' Federation has confirmed that a number of its members had received the policy note, but not all had begun making the adjustment.

"My company implemented the increase for March based on the policy note that we got," stated one employer who also asked not to be named. "It had the official ministry seal, so I had no reason not to accept it as official."

He said when his company did its calculations, the increased deduction per employee ranged from a low of $90 to a high of $700 for that month, and his company was now looking at how best to deal with it.

The ministry had said the increase in the education tax rate, which is expected to yield approximately $2.8 billion, was being undertaken to address the continued shortfall being experienced by the Students' Loan Bureau. The increased amounts would therefore be targeted to greater funding for the entity as part of the Government's commitment to improvement in the education system, it was stated.

anastasia.cunningham@gleanerjm.com

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