Dr Omar Davies says the real benefits to low-income groups will be zilch. - Rudolph Brown/ Chief Photographer

THE INCREASED burden placed on low- and middle-income groups by the $18-billion tax package announced by Finance Minister Audley Shaw last week has outstripped the 'give-back' in the proposed doubling of the income tax threshold, according to Dr Omar Davies, opposition spokesman on finance.

Responding to his counterpart's presentation, Davies argued that a large percentage of low-income workers would reap little or no benefit from the 100 per cent increase in the tax threshold, set to take effect in two phases. The threshold will move to $320,000 in July and further jump to $440,000 in January 2010.

"Simply put, not only will some reap no benefits, since they paid no taxes in the first instance, but they will be faced with increased costs resulting from the reduction in the list of GCT-exempt items, as well as the pass-through of increased tax on gasolene," he said.

He indicated that professional groups such as teachers, nurses and secretaries would be impacted severely by the petrol tax.

"All of them have them little deportee ..." he added.

Tax-free allowances

The Opposition spokesman called on the Government to shed light on the decision to remove personal income tax preferences such as accommodation benefits, gratuities and other tax-free allowances.

Davies asked whether the taxing of personal income-tax preferences would affect tax-free allowances contained in wage agreements. "Will raising of the threshold immediately make these tax-free allowances taxable?" he enquired.

And if the former finance minister's research is correct, some employees in the private sector could have their take home pay cut by some 15 per cent, when the tax on allowances takes effect.

Already, a number of private companies have made positions redundant, frozen wages and in some instances implemented wage cuts in response to the effects of the global economic recession.

Meanwhile, the tax on computers has been described as a "retrograde step" by the Opposition. "The fact is that for many of our younger and brighter citizens, a computer has become a necessity, an integral part of their bag of work tools,'" Davies said.

edmond.campbell@gleanerjm.com