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Storm shock reveals Jamaica’s narrow and fragile tax base
['Kasey Williams']
Jamaica Observer
KINGSTON, Jamaica –Hurricane Melissa has exposed vulnerabilities in Jamaica’s tax base, prompting the Government to sharply revise down revenue projections despite years of strong headline tax performance, according to an assessment by the Independent Fiscal Commission (IFC).
Before the hurricane struck in October, tax collections had been expanding steadily.
In the first half of the fiscal year, tax revenue grew 6.9 per cent year on year, supported by strong domestic activity and robust tourism-related inflows.
However, the IFC said that performance was highly concentrated and largely cyclical, leaving revenues vulnerable to sudden economic shocks.
While such inflows provide temporary support, the commission said they do not substitute for a diversified and resilient tax base.