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Jamaica scraps bank withdrawal tax

Jamaica scraps bank withdrawal tax

Posted by Shanelle Weir on May 01, 2014

The Jamaican government has announced it is scrapping controversial plans for a tax on bank withdrawals.

The measure, which was to have been part of the country's 2014-15 budget, had prompted widespread criticism because of its perceived unfairness.

Finance Minister Peter Phillips told parliament the levy would be replaced by other proposed duties.

Jamaica is currently implementing a debt restructuring programme backed by the International Monetary Fund.

On Tuesday, the World Bank approved a $510m (£301.5m) loan package to help Jamaica carry out wide-ranging economic reforms, seen as essential to reversing decades of low growth and high debt.

The Jamaican economy was already struggling before the global financial crisis, which has exacerbated the country's problems.

According to the World Bank, poverty levels rose from 10% to 17% between 2007 and 2010, while unemployment has reached 15%.

Mr Phillips said on Wednesday that instead of taxing money withdrawn from banks, the government would impose a 15% withholding tax on some insurance premiums and extend its consumption tax to imported services, closing a loophole in the system.

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