Money transfer agencies in Jamaica are bracing for a possible fallout if a proposed tax on remittances from the United States takes effect.
Acting general manager of JN Money Transfer, Horace Hines, says his firm is monitoring the discussions surrounding the proposal for the introduction of the tax.
He told The Gleaner/Power 106 News Centre that a tax on remittances is likely to have significant implications given that remittances contribute 17 per cent of Jamaica’s Gross Domestic Product – GDP.
Lasco Financial Services, the local agents for Moneygram, said this week that the imposition of such a tax would be unfair and would lead to higher service costs.
Another money transfer agency operating in Jamaica, Western Union, said that it was reviewing the proposal for the tax.
It says a tax on remittances has broad implications and suggests that it may push people to use unconventional means to send money to their relatives and friends.
The tax is outlined in a bill currently before the US Congress to amend the Electronic Fund Transfer Act to authorise the collection of a two per cent tax on remittances to 41 countries, which includes a number of Caribbean and Latin American countries.
The Opposition People’s National Party – PNP yesterday urged the government to pursue the necessary diplomatic channels to lobby the Donald Trump-led administration to scrap the proposal.
In a release, the PNP highlighted that the tax as proposed would have devastating effects on the Jamaican economy.
Jamaica receives about US$2 billion in remittances annually.
The PNP says the two per cent tax will result in Jamaica losing approximately US$40 million annually.
Foreign Affairs Minister, Senator Kamina Johnson Smith, says the government is actively monitoring the process and stands ready should the tax be approved to alert Congressional leaders, through the Jamaican Embassy in Washington, of the likely impact on Jamaica.
She also points out that the bill is only at the draft stage and many others which are brought to Congress annually fail to get approved.