As I sat and listened to the budget presentation (Revenue Measures) by the Minister of Finance, I thought to myself that finally, after my many years of writing and commentary supporting the reduction of taxes and particularly the removal of the Minimum Business Tax (MBT), I am now seeing it come to pass.

I don’t think enough of myself to think that what I have been saying over the years is what has caused it, but am heartened to know that there seems to finally be some proper thinking around what encourages growth and development.

When the estimates of expenditure was presented I had commented that it was a very good budget, as one could see that there was a lot of emphasis on infrastructure development, security, and education. I was pleased with that emphasis and you can just imagine how much more pleased I am to see the thought process coming out of the revenue expenditures.

The Minister correctly stated that tax should be about encouraging private sector activity, and should not be distortionary. I have been saying for years that our tax policy has been an impediment to growth, and one of my primary areas of course has been the MBT, which I have always felt discourages small businesses to register. In fact I have known people who refused to register their ideas in the past because of the MBT. This tax I think was just not well thought out and I am happy to see it finally go as of April 1.

The Minister also correctly spoke to the impediment caused by the asset tax, and that it would be removed for non-financial institutions. This makes a lot of sense, because by having an asset tax in place it implies that businesses are being penalised for accumulating assets, which is what businesses should do to create wealth. I would have loved to see more though, and there should be a timeline laid out for the eventual removal of the asset tax on financial institutions also, as this would no doubt further reduce the cost to financial institutions and with increased competition this can be passed on to consumers.

This competition will definitely be increased with the measure to abolish stamp duty on mortgage refinancing, securities transfer, registering land, etc. This is to come into effect on April 1 also, and I think is one of the best moves I can remember to stimulate competition between financial institutions.

For too many budget presentations I have heard Ministers decry the need for financial institutions to reduce interest rates, while at the same time putting on new taxes on transactions to impede competition. This move to eliminate this tax and replace it with a $5,000 processing fee will certainly improve competitiveness and is similar to the move to allow for number portability. Now people can easily take advantage of lower interest rate offerings and should drive credit with the costs to transfer securities significantly reduced.

http://www.jamaicaobserver.com/business-report-daily-biz/finally-a-bold-and-visionary-budget_159020