The opposition People’s National Party’s (PNP) plan to remove tax from overtime payment for workers in the public sector earning under $6 million annually will “not likely pose any significant fiscal risk”, economist Keenan Falconer has said.
“I think the proposal could benefit from further and better particulars, but it sounds feasible and practical in its intent – certainly from an equity perspective,” Falconer told The Gleaner on Thursday.
His assessment follows the release of the PNP’s 60-page manifesto on Tuesday, which the party said it intends to use as a guide to building Jamaica should it form the Government after the September 3 general election.
The opposition party said it intends to remove tax from tips, gratuity, and commissions earned by tourism workers, subject to anti-abuse provisions.
Further, while speaking on a political platform in Porus, Manchester, Wednesday night, Opposition Spokesperson on Security Peter Bunting said some public-sector workers would benefit from the policy.
“I want the attention of police officers, nurses, all public servants who work overtime because I want you know that the PNP is going to do this for you. In our manifesto, we gave a commitment that overtime pay for persons in the public sector and otherwise who earn overtime, if you are taking home less than $6 million a year, your overtime earnings will be tax free under the People’s National Party government,” Bunting said.
Falconer said the proposal may also be productivity inducing.
“I don’t anticipate such a policy would necessitate a material fiscal adjustment on the part of the Government, especially given the income threshold it’s targeting. In my view, it is not likely that this measure will pose any significant fiscal risk, nor do I see it conflicting with the general imperative to manage overtime payments prudently as part of controlling the wage bill,” he said.
“It’s difficult to give a precise figure but it’s estimated to be negligible in the context of the overall Budget. The risk of forgoing that revenue would also be mitigated by the eligibility requirements and restrictions for working overtime, where it will not be applicable to certain job functions and responsibilities given the nature of the work,” he further explained.
A concern, he said, however, would rest with carefully accounting for actual hours worked under a new system of overtime and monitoring those effectively to mitigate any possible compensation risk.
Veteran trade unionist Vincent Morrison, who serves as president of the Union of Clerical, Administrative and Supervisory Employees (UCASE), said the proposal is welcomed.
According to Morrison, it would not only help the individual worker but boost production and productivity.
He said it would incentivise workers to take on longer hours, pointing to the security guard industry.
He explained that in order for that group of workers to survive off wages, they must work at least 12 hours per shift.
“So it’s a direct benefit to those category of workers because their workweek is not necessarily 40 hours. We support the removal of the tax from overtime,” he said.
But added to that, Morrison said taxes on redundancy payment ought to be removed and workers should be given a clear break because there is no guarantee of them finding another job immediately.
Similarly, he said that while pension is removed before the salary is taxed, this is ultimately paid as income, which is taxed.
He said this should be exempted.
“But I support the proposal because I believe it will go a far way to boost production and productivity in all the sectors of the country,” he said.
