INCOME TAX CAUTION
Large fiscal deficit means proposed policies by JLP, PNP would need careful roll-out, economist warns
Published:Tuesday | August 26, 2025 | 12:11 AMKimone Francis/Senior Staff Reporter
The income tax plans by Jamaica’s two main political parties are not expected to be implemented before the 2027-2028 fiscal year, one business analyst is theorising.
This is because the current fiscal profile of the country indicates that Jamaica is projected to run a fiscal deficit of nearly one per cent, or $33 billion to $35 billion, in each of the next two fiscal years, economist Keenan Falconer said.
“As a result, I expect that a phased implementation of each would start thereafter and be completed towards the end of the next parliamentary term or shortly afterwards.
“It is difficult to assess feasibility, given the lack of funding details; however, increasing the threshold will result in more lower- to middle-income earners being removed from the tax roll completely, with everyone above the new threshold benefiting from an equal decrease in their tax liability,” he told The Gleaner.
The Jamaica Labour Party (JLP) is promising to reduce income tax to 15 per cent of annual earnings on a phased basis, if it continues in government.
Prime Minister Dr Andrew Holness, the leader of the JLP, said this would allow “hard-working” Jamaicans to keep more of their salary.
In Jamaica, a personal income tax rate of 25 per cent – and 30 per cent for income exceeding $6 million – is applied to annual taxable income.
Meanwhile, People’s National Party (PNP) President Mark Golding announced that a future PNP government would raise the personal income tax threshold, allowing persons earning up to $3.5 million annually to pay zero per cent income tax.
Falconer said reducing pay-as-you-earn tax would impact the same number of people. However, income groups above the current threshold would be affected differently. He added the overall cost is likely lower because the revenue loss could be offset by the Government’s plans to expand the personal income tax base from about 400,000 people.
“As both parties have committed to reducing or removing some other categories of taxes, however, I believe it is likely that these policy proposals will necessarily have to be accommodated through a re-prioritisation of expenditure in other areas,” said Falconer.
He said each proposal is estimated to cost at least double-digit billions of dollars.
“Such a magnitude of potentially foregone revenue will have to be absorbed and phased in carefully and sustainably in a manner that doesn’t conflict with the attainment of fiscal targets in the medium term,” he said.