In Jamaica value-added tax takes two different forms; these are General Consumption Tax (GCT) and Special Consumption Tax (SCT) which consist of specific excise tax in the country in relation to the financial sector. The implementation of these tax systems occurred on October 22nd 1991 at a rate of 10%; replacing eight (8) different forms of taxation in the country, some of which are customs and entertainment duties. These value-added tax systems were implemented to reverse the deficit of the country and serve as a catalyst for economic growth. In an attempt to encourage the economic growth of Jamaica the tax system of GCT went under further reform in 1993, 1995 and 2003 in an aid to refine the tax system to better suit the country. It is in this regard that the reform of 1993 led to the removal of a number of zero-rated items to the exemption category and also raised the standard rate of the tax from 10% to 12.5%. It was in the 1995 reform that the standard rate of 12.5% was then raised to 15% inclusive of the addition of more items to the exemption list. According to Edimston an Economist at the University of Toronto, the increase in exempted items within the tax system and its reforms was to ensure that goods and service that were considered vital to lower income homes remained affordable for the lower class in the country(2010). In the 2003 reform, Jamaica removed some of the items from the list of exemptions because the increase in such items affect the revenue making capacity of the country thus resulting in substantive decreases in revenue. In addition, an increase of the rate of the items that were once zero-rated was also implemented. .It was after these reforms that GCT and SCT were seen as critical forms of revenue f...
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...cost levels to export items which as previously stated in turn resulted in the closure of businesses. As the value added tax of Jamaica went through much reforms to encourage possible change within the economy to raise governmental revenue, results from the implementation of the tax however, has added to the national deficit of the country with little to no recovery.
Works Cited
Aizeman, J. Jinjarak, Y. 2010. The Collection Efficiency of the Value Added Tax Theory and International Evidence.
Ministry Of Finance. 2013. White Paper on Tax Reform to Secure Adequate Revenues for the Future Bahamas.
Peters, A. Bristol, M. 2006. VAT Is It Suitable for the Caribbean Community.
Edimston, K. Bird, R. 2010. Taxing Consumption in Jamaica The GCT and SCT. University of Toronto.
Victor, P. 2010. VAT A Brief History Of Tax, Nassau Guardian. December 31, 2010
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