Edmond Campbell, News Coordinator

MOTORISTS, CIGARETTE smokers and licensed firearm holders have been hit hard by the $2.98-billion tax package crafted by the Jamaica Labour Party (JLP) government - its first in 20 years.

Finance Minister Audley Shaw, in opening the Budget Debate yesterday, said of the $2.88 billion in projected revenue from tobacco, the Government plans to allocate $538 million to the National Health Fund.

In terms of the motor vehicle licence fee, which was last increased in 2003, a 50 per cent hike in the rate will take effect on May 1.

Motor vehicle examination fees, driver's licence and other related fees have also been increased and will take effect next month.

The importation of damaged motor vehicles, an industry that has flourished in the last few years, will now be a thing of the past.

Shaw said yesterday that the Government has placed a ban on the importation of damaged vehicles and those without a certificate of fitness from the country of origin.

"It is a system that has been abused," Shaw said, noting that this would significantly reduce the leakage of revenue.

In a presentation just shy of three hours, Shaw sought to tell the country how the new Government would improve the economy and implement new initiatives.

He said taxpayers will receive a break as the threshold is to be increased effective July 1 to $200,304.

This is approximately a 3.78 per cent increase in the threshold, which currently stands at about $193,000.

Another increase will take effect in January 2009, moving the threshold to $220,272.

Transfer tax on stamp duty and property transaction will be reduced on May 1, while withholding tax for companies listed on the stock exchange will be removed.

The Government last week tabled a $489.5 billion net budget.

This means the gap of almost $3 billion in the budget will be filled by the revenue measures announced.

Government has delivered

Reviewing the administration's seven months in office, Shaw said the Government has delivered on a number of pledges it made. The revised fiscal deficit target of 5.5 per cent of GDP has been met with an outturn of 4.7 per cent of GDP. This is two percentage points higher than the original target of 4.5 per cent set by the previous administration. The fiscal deficit target for this fiscal year is 4.5 per cent.

"We had to cut expenditure and take tough decisions. We had to demonstrate our ability to exercise fiscal discipline. Had we not done so, the deficit would have climbed to over seven per cent," he said.

A gross domestic product growth target of three per cent for this fiscal year has been projected while the Government expects to achieve a balanced budget by financial year 2010-2011.

Meanwhile, the finance minister said the memorandum of understanding between the Government and public sector unions would be signed soon.

The World Bank diagnostic study on corruption, proposed by the Government, will begin this year, and an audit of public sector agencies will take place this year, beginning with the Ministry of Finance and the Public Service.

edmond.campbell@gleanerjm.com