“This
levy will be chargeable on all withdrawals from deposit-taking institutions by
way of electronic Banking, point of sale transactions, cheques, automated Banking
machine (ABM), automated teller machine (ATM), or over the counter and Internet
transfers”
Minister of Finance, Dr.
Peter Phillips, commenting on the planned ATM Withdrawal Levy coming in effect
on Sunday June 1st 2014
The
2014/2015 Budget reading by Minister
of Finance, Dr. Peter Phillips has not been a pleasant one. First, it appears
we’re gonna get hit by a ATM (Automated Teller Machine) Withdrawal Tax or Levy as
announced in “Government
taxes Bank withdrawals”, published Friday April 18, 2014, The Jamaica Gleaner and “Govt's plan to raise $6.7 billion”,
published Friday, April 18, 2014 5:24 PM, The Jamaica Gleaner.
The
measure as announced by the horses’ mouth by the JIS (Jamaica Information
Service) in “Measures
Outlined to Raise $6.7 Billion for Budget”, published April 18, 2014 By
Alecia Smith-Edwards, The Jamaica Information
Service is expected to provide some
JA$2.25 billion to contribute to the JA$540.1 billion Budget, which breaks down
as thus:
1.
JA$540.1-billion budget
2.
JA$421.2 billion in projected revenues
and grants
3.
JA$118.9 billion short of their goal
To
plug that gap of JA$118.9 billion, Minister of Finance, Dr. Peter Phillips is
getting creative with the taxes and borrowing:
1.
JA$110 billion in International loans
(read IMF, et al)
2.
JA$1.4 billion in Local Bank Loans
3.
JA$6.7 billion from new Taxes (read the
ATM Withdrawal Tax, et al)
4.
JA$2.25 billion of the JA$6.7 billion
from new Taxes is from the ATM Withdrawal Tax
According
to Minster of Finance Dr. Peter Phillips, the Tax, to be implemented on Sunday
June 1st 2014, is structured as follows:
1.
JA$1,000 withdrawals will have to pay
JA$1.00 in taxes
2.
JA$1,000,000 to JA$5,000,000 withdrawals
will have to pay 0.09% in taxes
3.
JA$5,000,000 to JA$20,000,000
withdrawals will have to pay 0.075% in taxes
4.
JA$20,000,000 withdrawals will have to
pay 0.05% in taxes
No
surprise there, as the recently concluded CaPRI (Caribbean Policy Research
Institute) study confirmed what CAC (Consumer Affairs Commission) has been
saying all along based on customer complaints; Banks have been profiting from
increasing Bank fees as stated in “Local Banking Fees
In Keeping With Western Trends - Study”, Published Monday April 7, 2014
10:06 am, The Jamaica Gleaner.
The
ATM Withdrawal Tax as it’s so called is really a Levy (but who cares right?)
and extends to all forms of withdrawals, except between Accounts owned by the
same persons at the same financial institution. Basically it includes:
1.
Electronic Banking
2.
POS (Point of sales) Transitions
3.
Cheques and Withdrawals at ABM, ATM or
ETM
4.
Over the counter i.e. Bank, Withdrawals
5.
Internet Bank transfers
Opposition Finance
Minister Shaw Upset – Tax Really only affect affluent members of CAPI
Of
course, many oppose this measure, as, really, nobody likes being taxed, worse
from Bank Withdrawals and even worse POS transactions. Especially as many
Jamaicans already use Credit Card and play catch-up with their Debit Cards to
pay off the balance before they are due each month.
Opposition
Finance Minister Shaw is on the warpath, claiming that this Tax is merely the
Government using the CaPRI Study to justify introducing another Tax as stated
in “Shaw
criticises govt's tax on withdrawal from Banks”, published Friday, April
18, 2014 9:13 AM , The Jamaica
Observer .
So
too is CAPI (Citizens Action for
Principle and Integrity), an activist group made up mostly of affluent
returning residents, expatriates and Business people I.e. Middle class, who
called the ATM Withdrawal Levy “unconscionable and oppressive” to quote the
newspaper byline in the article “Tax
on withdrawals 'unconscionable and oppressive', says CAPI”, published
Friday, April 18, 2014 8:20 PM, The
Jamaica Observer.
But
the truth be told, the Minister of Finance, Dr. Peter Phillips, is living up to
his doctorate. A study was done that confirms beyond a shadow of a doubt that
the Banks are tapping into Banking fees to make more money, raising Withdrawal
fees by as much as 115% from JA$100 to JA$215 as is the case with NCB (National
Commercial Bank) Withdrawals.
Thus
knowing that Jamaicans are hooked to this means of getting and spending their
money due to its convenience, it makes only sense to Tax what are inelastic
sources of Taxable Revenue, that being the very act of spending your money. If it's good for the Goose (Banks), then it must be good
for the Gander (Government of Jamaica)!
For
once, no-one can criticize the GOJ (Government of Jamaica) for ignoring a
scientific study from CaPRI that confirms and anecdotal observation by another
institution, the CAC. It’s scientifically sound and logical, which is why I’ve
decided to pen this article.
ATM Withdrawal Tax
affects the Wealthy – 34% of Jamaicans are still unBanked
This
ATM Withdrawal Levy only affects the very wealthy (read CAPI) who have large
deposits of cash from which they make interest from Investment Accounts. It’s
for this reason their attempt at a protest by having Jamaicans wear black as
noted in “CAPI
Plans Black Friday To Protest Withdrawal Tax”, published Wednesday April
23, 2014 3:22 pm, The Jamaica Gleaner
and “CAPI:
Wear black tomorrow against proposed ABM tax”, published Thursday, April
24, 2014, The Jamaica Observer fell
short.
Hardly
anyone showed up as noted in “Moderate
participation in Friday’s ‘wear black day’”, published Saturday, April 26,
2014 4:57 PM, The Jamaica Observer,
as Friday is TGIF (Thank God it’s Friday) and coincidentally, payday for many
persons with bills to pay. To stop and display placards or even wear black was
a bit much for many Jamaicans who simply use a Bank Account to receive pay or
encash cheques (that’s me!!).
Many,
like myself, prefer to be paid in my hand in cash, despite having a Bank Account,
as I’ve been dodging Bank Fees since 2012! Worse, John Public, the average
Jamaican, doesn’t dabble much in Bank Accounts as noted from the UWI Stats
researched by Director of the Centre of
Excellence of the Mona School of Business, Dr Maurice McNaughton presented
by Minister of State in the Ministry of Science, Technology, Energy and Mining,
Julian Robinson that state:
1.
34%
of Jamaicans above 18 years do not own Bank Accounts
2.
66%
of Jamaicans above 18 years own Bank Accounts
3.
12%
of Jamaicans above 18 years who own Bank Accounts have Debit Cards attached and
use them actively for Transactions
4.
80%
of adult Jamaicans have limited access to low-cost, efficient and user-friendly
Banking Services
If true, then it means only PAYE
(Pay as You Earn) as well as Investors with large sums of money that they make
interest from will be affected. Worse it they are a part of the 80% with
limited access to Banking facilities and then they’d mostly pull all their
money all at once.
A trip to the Bank is not a pleasant
thing to endure. Especially one to which they have limited access wastes a good
part of the day standing in line at the ATM and in lines in the Banks, costing
the PAYE Worker time and money
Just to repeat that, even the PAYE’s
hardly use their Bank Accounts; as soon as the pay reaches into their Bank
Accounts, it’s all spent to cover living expenses and bills. So the real
targets are those people in society that make money via investment Banking
usually dabbling in sums of money larger than JA$1,000,000 on average.
This is a Tax on the Rich People for
whom a Bank or Investment Account is a means of making money from Government
Paper, CD (Certificates of Deposits) and US Dollar Denominated Investment
Accounts that may be a mixture of high-risk Stocks, Mutual Funds and Government
Bonds!
Cashless Society is
coming – Digicel Mobile Money will make Digicel the Bigger, Better MoneyMachine
But
the real power of this measure is that it would eventually lead to all
Jamaicans being forced to do all their Transactions via a Bank Account,
possibly a Mobile Money Account as predicted in my blog article
entitled “BOJ
to regulate and approve Mobile Money Industry in Jamaica - JCCUL JCUES is the
Man of Steel as GraceKennedy joins The Last Stand for a Cashless Society”,
making all Financial Transactions easily traceable and thus taxable.
I
suspect this coming of Mobile Money to receive and Spend Remittances may be
real reason why NCB parted company with MoneyGram and began rolling out their
Network for Bank on the Go iABM Machines that can read Cash.
NCB
is lining up itself to directly tap into that coming market as prophesied in my blog article entitled “NCB
Under Pressure cuts ties with Remittance Agent MoneyGram - NCB using innovation
Edge to plan Mobile Money, Remittance and E-Commerce Triple Play Services by
September 2014”.
Already
many are anticipating this, with even Telecom Provider Digicel making plans to throw their
hat into the Ring and launch their own Mobile Money Service as well to compete
against the likes of GraceKennedy and NCB (National Commercial Bank) as stated
in “Digicel
To Roll Out E-Money Service In Jamaica”, Published Wednesday April 23,
2014, The Jamaica Gleaner, an
announcement deserving of an article in its own right.
Good move by the Minister
of Finance, Dr. Peter Phillips, as he’s set the stage for a Cashless Society by
2017, which by the way is also an IMF (International Monetary Fund)
recommendation to increase Tax revenues. Now all he has to do is to get more
Jamaicans to use Bank Accounts for all their transactions by implementing a
Cashless System, such as Mobile Money as a mandatory means of doing
transactions and outlawing Cash Transactions with heavy fines.
No comments:
Post a Comment