Jamaica to break decade‑long ‘no new taxes’ stance in post‑Melissa budget

Finance Minister Fayval Williams confirmed late Wednesday that new tax measures will be included in Jamaica’s upcoming national budget, breaking the Jamaica Labour Party (JLP) administration’s long-standing record of fiscal restraint. The government had previously gone eight years and 10 consecutive budgets without imposing any new taxes.

Williams said the shift comes as the government grapples with a widening fiscal gap triggered by Hurricane Melissa, which struck on October 28. According to the most recent Independent Fiscal Commission assessment, the storm inflicted an estimated US $8.8 billion in physical damage, equivalent to about 41 per cent of Jamaica’s GDP — making it the most costly natural disaster in the nation’s history.

In her statement to the nation on Wednesday evening, hours before Thursday’s Budget tabling, Williams said the hurricane not only pushed reconstruction and public service demands upward but also slowed economic activity in key sectors, reducing government revenues.

“It must be noted that the impact of the hurricane has reduced our revenue, as economic activity slowed in certain sectors. That creates a fiscal gap that we cannot ignore,” she said, adding that new revenue measures would be necessary to help close it.

Williams stressed that the government is seeking to balance post‑disaster recovery with fiscal discipline, a hallmark of Jamaica’s economic strategy over the past decade. While borrowing will still play a part of the financing strategy, she said, it would be limited and targeted at capital investments in infrastructure, agriculture, logistics and digital systems — areas that can expand productive capacity and strengthen resilience.

“We could choose to finance the entire deficit through borrowing. But Jamaica has already travelled that path with negative outcomes… We have lived through the debt trap before — decades of high debt, high interest payments, and limited fiscal space,” Williams added.

The minister also indicated that equity will guide the design of new tax measures, with efforts underway to address anomalies in the current tax system and protect vulnerable households and businesses from undue burden.

Independent analysts say the shock to Jamaica’s public finances is significant. Based on damage estimates tied to the hurricane and projections of slower economic activity, the government has even temporarily suspended fiscal rules designed to rein in debt, acknowledging the scale of the shock.

The 2026–2027 financial year begins on April 1, and the full details of the new revenue measures are expected to be outlined during the Budget debate in March.