Article: http://www.jamaica-gleaner.com/gleaner/20080218/news/news4.html
In Jamaica the Senate had reviewed the Income Tax Act to provide better tax incentives for saving in pension plans. The new pension plan included an income tax relief up to 20% of the annual chargeable income of an employee or a self-employed person that goes into the retirement plan. Employers would receive income tax relief on the amount of money they contribute to the employee's pension plan. The new bill also promised that when employers’ purchase is less than 10% then the employees may purchase the difference between the employers' shortfall, but cannot exceed 20%. The new bill also removed the limit of $120,000 for lump-sum payments. Senator Don Wehby regarded this as most important proper arrangement placed to enable all Jamaican citizens to have adequate pensions saved up for their retirement. He also promised that more changes to the tax laws would be made, such as providing tax relief. In addition, wider review of the country's taxation regime will be discussed at a later time.
Relationship to Chapter 4 - The Growth of Government Spending
This article is related to chapter 4 because Wagner's law of increasing state activity can justify the actions that the Jamaican government is doing. Pension plans are an example of transfer payments. These are monies paid out by the government to individual and other levels of government where no service was performed for the money. It may be a possible that Jamaica may follow Canada's footsteps in terms of government spending in transfer payments. Transfer payments have risen from 17% to 51% from 1930 to 1992 respectively. Due to rapid economic growth in Jamaica, the government has become socially conscience about the less fortunate. This is because there is a transition from a rural to an urban country in Jamaica.
I believe it is a good idea for Jamaica to amend their Income Tax Act to create better pension plans for their citizens. This encourages saving for retirement. If they are planning for their retirement, it will mean that the government saves some money in the long run since citizens are less likely to get help from the government. With money saved it can allocated to other services that requires more attention, such as health or education. In conclusion, reviewing the Income Tax Act will definitely benefit Jamaica's economy as a whole.
