Economist: JLP’s Income Tax Promise Could Cost $70B

The JLP’s promised reduction in the rate of personal income tax could cost as much as $70 billion in total revenues.

That’s according to economist, Keenan Falconer.

The Labour Party announced a phased 10 percentage point reduction in personal income tax as part of their manifesto launch on Sunday.

This would move the rate down from 25 percent to 15 percent.

But, the economist says more details are needed regarding the proposed measure.

Chevon Campbell tells us more.

Falconer’s $70 billion assessment is based on the 10-point reduction in the personal income tax rate being implemented in the current financial year.

This would immediately move the current rate from 25 percent to 15 percent.

According to the revenue estimates for the 2025-2026 Financial Year tabled in February, the government projects personal income tax collection at just over $170 billion.

This is predicated on the 25 percent rate paid by Pay As You Earn, PAYE, earners over $1.8 million.

A forty percent reduction in this rate, moving it to 15 percent, would see the government lose approximately $68 billion in revenues based on the current estimates.

It should be noted that the JLP has suggested the measure will be phased in, as necessary.

But, neither the rate nor the timeline for this has been provided.

The PNP has countered with a proposed upward adjustment in the income tax threshold to $3.5 million.

Mr. Falconer questions the feasibility of implementing either the JLP or PNP’s proposal over the next two financial years based on projected revenues.

Using the same estimates, even a one point reduction in the rate of personal income tax could cost the government roughly $7 billion if the measure were imposed this fiscal year.

Mr. Falconer is calling on the JLP to provide more details.

For example, he notes that there’s no reference to the 30 percent rate imposed on those earning $6 million or more.