Who has the better tax plan for Jamaica? JLP or PNP?

So both political parties have made big promises to reduce personal income tax for Jamaicans, using two different approaches. 

The opposition PNP has promised to raise the income tax threshold to J$3.5 million. That’s about US$22,000.

While the ruling JLP has promised to reduce the income tax rate from 25% to 15%. 

So which plan will save you more money? And are these promises even doable? We did the math, and here’s our assessment. 

The PNP plan will put significantly more money in your pocket than the JLS’s plan if you earn less than $6 million a year and are younger than 65.

After $6 million, it starts evening out and you’d actually save slightly more with the JLP’s plan. However, the JLP would also be abolishing income for seniors 65 and over, up to $6 million. 

So if you’re over 65, and earn more than $3.5 million, the JLP plan would save you more. If you’re over 65 and earn less than $3.5 million, your savings would be the same with either party. 

Under the PNP’s plan, anyone earning less than $3.5 million a year would pay no income tax at all. 

Under the JLP, tax-free income is currently $1.8 million. This will be raised to $2 million by 2027. So the PNP is looking to almost double the current threshold. 

Now here’s the real question, because we all know in politics, promises are a dime a dozen. Can it be done? Would either party be able to deliver on these promises? How much would all of this cost? And where would they get the money? 

Because let me remind you, the government gets the bulk of its revenue from you paying taxes. If they’re going to reduce taxes so significantly, where will they get the money to run the country? 

So let’s look at the numbers. And let me preface this by saying there are a lot of numbers out there. Depending on who you ask, the estimates vary wildly. So I’m just gonna stick to what the parties themselves have said it will cost. 

The PNP estimates that its plan would cost $55 billion.

The JLP says its plan would cost between $28 and $44 billion, which is a very wide discrepancy. I wish they had given a more concrete figure. Finance Minister Fayval Williams initially said $25 to $30 billion at the debate. But at a subsequent press conference, she raised that figure significantly. 

But either way, by using the parties’ own estimates, the PNP plan would cost more, which tracks because as we already explained, you would be getting more money in your pocket with the PNP plan, so obviously it would cost more. 

Now how are they going to pay for it? 

The PNP said it would be funded by growing the economy, and without any new taxes elsewhere to compensate. They argue that when they give people money back in their pockets, those people will turn around and spend it in the economy, which will then attract GCT (General Consumption Tax) at 15%. So anywhe’ yuh tun, makka juk yuh. The government will be collecting their taxes one way or another. 

This is the idea of shifting from direct to indirect taxes, which ironically was the JLP’s idea.  The JLP came to power in 2016 on the campaign promise to double the income tax threshold, which at the time was only 700 and something thousand dollars. They promised to raise it to $1.5 million and they did it, despite a lot of scepticism that it was even possible. 

They’ve since raised it again to $1.8 million and are planning to raise it to $2 million in 2027. Plus the new promise to reduce the rate to 15%. 

So it’s rather ironic that the PNP has hijacked the JLP’s winning strategy to give themselves an edge in this very tight election. The latest Don Anderson poll has the parties neck and neck, with a slight lead for the PNP.  This campaign promise could end up being the deciding factor. 

But another important factor will be trust and credibility. Who would you trust to deliver on their plan? 

And that’s the bottom line.