The Jamaican Government’s Withdrawal Tax is anti-business, does not protect the poor and weakens the middle class
by Gordon Swaby
I commend Peter Phillips on the work that he has done in the Finance Ministry thus far. Our debt to GDP ratio is down, interest rates are not as high as they used to be and inflation is down, but the recent move by the Jamaican government to implement a levy on bank withdrawals is a bad move. It is an anti-business and retrograde move.
Let me explain.
A little bit over a year ago I published on this blog a debit card charge comparison chart for Jamaican banks. You can find that blog post here. The chart has not been updated , but I am certain that bank charges have been adjusted (upwards) since.
To summarise the chart, two of our largest banks, National Commercial Bank ( NCB) and Scotiabank had some of the highest charges, Scotiabank charging $66 JM for each multilink withdrawal while NCB charged $60.34 per withdrawal from a multilink ATM.
In January 2014, the Jamaican government launched an investigation into the fees that commercial banks and credit unions charged, I believe that consensus was that bank fees were too high. See a news release on the issue here .
You can find the ministry paper for the withdrawal levy here.
Side note: Why are we getting scanned copies of ministry papers in 2014? Why can’t we get the original document in PDF format?
Information on the Levy is #3 in the paper. For convenience, see it below:
a) As part of Revenue Measures FY 2014/2015, the House is being asked to approve the introduction of a levy on withdrawals from deposit-taking institutions and encashments from securities dealers.
b) This levy will be chargeable on all withdrawals from deposit taking institutions by means of: -
i. Electronic banking (e-banking)
ii. Point of Sales (POS)
iv) Withdrawals – ABM/ATM/ETM or over the counter and;
v Internet transfers (with the exception of transfers between accounts of the same person in the same financial institution)
If you’re withdrawing less than a million JMD from the bank the government will take 0.1% of it.
Between a million and 5 million the government will take 0.09% of it.
Greater than 5 million, but less than 20 million and the government will take 0.075%
Greater than 20 million dollars and the government will take 0.05%
So, if you go to the ATM and you withdraw $1,000 or you pay it at your favorite restaurant the government will take $1.
If you buy $5,000 worth of gas for your motor vehicle and you use your card the government will take $5. Not a big deal, in fact, it’s negligible. Surely you can give your government $1 on every 1,000 up to $999,999.
With close to 1 million Jamaicans unbanked this move still (supposedly) protects the most poor and vulnerable. Great, but not exactly.
The government, understanding how tough things are for their people even moved the personal income tax threshold from $507, 312.00 to $557, 232.00 causing a whopping 12, 823 persons to fall outside the tax base.
On an individual level the levy is in fact negligible, but that that’s not where the real issue is. Inevitably the banks will pass this charge on to their customers via an increase in bank charges, this is fair, but bear in mind, the consensus was that bank fees were already high. Not only will the bank charge you for the actual tax, they’ll charge the customer for the administration involved in paying the government the tax monthly, implementation of the levy etc, so expect increased fees from the banks soon if the levy is not revised or removed.
The second and larger issue. Many llegitimate medium sized and large businesses pass millions of dollars through their respective banks daily, i.e millions of dollars worth of deposits AND withdrawals. Legit businesses that both the poor and middle class utilise. e.g restaurants, gas stations, supermarkets etc.
Here’s a scenario:
John Brown owns a business that deals with a lot of cash (e.g money gram locations, bakeries, supermarkets etc). On a daily basis John deposits 6 million dollars into the bank. John needs 5 million $ to cover his bills daily. So, John would need to withdraw that 5 mil. John (or that transaction) would therefore fall in the 0.09% bracket.
$5,000,000 * 0.09/100 = $4,500. John is paying $4,500 in taxes DAILY. Not a big deal, right? But wait, John operates 300 days out of the year. So, 300 * $4,500 = $1,350,000 in taxes.
John loves his country, but he’s also operating a business and will have no choice but to pass on these charges to his customers, of course prior to this John was struggling with the already high bank charges. This is just one example, but there are many others. There are other consequences, but I think these are the ones that will affect us the most in the short and medium term. The poor and middle class will suffer.
Of all the revenue measures, the government will make the most from the Withdrawal tax ($2.250 billion), but I would encourage them to reconsider and explore more equitable and sensible alternatives.
Feedback is of course always welcome.
A couple of days ago I saw a conversation on twitter questioning the usefulness of LinkedIn for Jamaicans. While not as useful to Jamaicans as it is for Americans, I still think a lot of value can be extracted from the service.
1. LinkedIn is google friendly: Whether you like it or not, people will google your name. This could be the difference between you landing that dream job, getting that business deal or whatever else. You can’t control what is indexed when your name is googled by others, but you can influence it. Nobody wants to a be a virtual unknown on Google. My linkedIn page is the 6th result when my name is googled. My Wikipedia page is first, my personal blog second, my twitter page 3rd and 2 gleaner articles in 4th and 5th place.
A linkedIn page is an opportunity to showcase the best of you. You don’t get that opportunity when an external party writes a blog post about you, newspaper article etc
2. A great way to connect with professionals you’ve met: You go to a business meeting or networking event, you meet a few people and you’re interested in keeping that connection. They’re not on twitter or Facebook, but if they are you’re not comfortable following them there or they’re not comfortable being followed. LinkedIn is that professional network between Twitter and Facebook.
3. An easy way to keep your CV updated: Keeping your CV updated isn’t something that only job seekers do. Prior to LinkedIn I kept my CV updated via a Microsoft word document. It wasn’t a frictionless process so I didn’t make it a habit to keep it current. LinkedIn on the other hand makes it very easy to do. Whether you’re looking for a job or not, it’s important that you keep your CV updated as it may requested at some point for whatever reason. Whether it’s because you’re getting an award, speaking at an event or some other reason.
I spent a couple days in Geneva, Switzerland and planning the trip wasn’t a huge hassle because of technology. If you know me, you know I’m not big on traveling, but these utilities really helped me to make it as pleasant as possible.
I’m a HUGE Evernote fan and I’ve been using it for a few years. I’ve never had the opportunity to use it for travel until now and it really shined. It was particularly helpful with my pre-planning and just helping me to deal with airport hustle and bustle. I’ve written about Evernote before ( years ago), but I still can’t really pin down a great explanation for it. Put it this way, Evernote is great at storing stuff, that “stuff” could be videos, audio, PDFs, emails etc; anything and everything. Not only is Evernote great for storage, but it’s also really good at helping you to find the things you’ve stored in it. Evernote’s search feature is really powerful and can find a word, phrase, sentence or whatever within PDF files, word documents or on an actual image.
Evernote’s web clipper extension really helped me to save information I came across while researching Geneva. I created a notebook (think: folders) called “Geneva” and just threw all my trip related information in there. When I got emails that were related to my trip in my email for example I would use the web clipper feature and it would automatically format the email and save it in my “Geneva” notebook. I also saved my flight itinerary in it. When I was ready to travel I made the notebook available offline and hit the road. Evernote’s “offline” feature for notebooks allows you to access all your files whether or not you have internet access. This makes it easy for me to access the files from my iPad, iPhone etc.
I knew about this app for a couple years, but never had a reason to use it. It’s amazing. I can point my iPhone’s camera at any french sign and it instantly translates what I’m seeing through my iPhone’s camera to English (no internet connection required). They have different language packs that you can purchase, I purchased the French to English language package as many signs in Geneva are in French.
My friend Jamie introduced me to Kayak; It’s really good. Once you get your itinerary, forward it to your personalized kayak address and that’s when the magic happens. Kayak will email you when it’s time to check-in, if your fight is delayed it will email you, it will let you know what your gate number is and many other features. Check it out at kayak.com
From Kingston to Miami, from Miami to London and from London to Geneva. All with their different timezones. It’s easy to get thrown off by this. Before I left I added the clocks for each respective location to the iPhone’s world clock (I’m sure you can also do this on any other smartphone) . Problem solved.
Hopefully you find these useful the next time you’re traveling. Leave your tips in the comment if you have any. I would love to hear how other people are utilizing technology to make traveling easier and more pleasant.
I have only ever owned two brands of smartphones – Blackberries and iPhones. I’m an Apple fan; I love Apple products and I’ve owned many of them. Currently, I own an iPad 3, an iPhone 4 and a mid-2012 Macbook Pro –I’m deeply entrenched in the Apple ecosystem and it has worked really well for me. I’ve never had anything favorable to say about Android devices, but I’ve never actually used one extensively either.
I’ve been using a Samsung Galaxy S4 for exactly one week and… wow. Transitioning from a 4 x 5 grid, 640 x 960 pixels, 3.5 inches 1 GHz 2010 iPhone 4 running iOS 6 to a 1080 x 1920 pixels, 5.0 inches, Quad-core 1.6 GHz, 2013 Samsung S4 running Android’s Jelly Bean, wow, wow, wow. The difference in specs is ridiculous, but even bigger for me is the difference in operating system functionality.
The Galaxy S4, Samsung’s latest flagship phone, is the successor to the S3, a widely popular phone that did really well ( and still does). No doubt one of the best phones to start my Android experience with. My introduction to the S4 and the Android operating system was weird. It went something like ( in this particular order):
1. Yeah! this is a pretty cool phone: The novelty of a new phone, obviously curious and excited to “get into it”.
2, Jesus, I’m overwhelmed; I have no idea where to start: Personalizing the phone was a challenge – you know, the basic things like changing the notification sounds for apps, understanding and utilizing widgets, configuring the home screen etc
3. I hate this damn phone; I’m going back to my iPhone: After not being able to figure things out, I started to become frustrated. I also missed some iOS features, albeit small ones, but sometimes small features are the best ones; features you’ll never miss until you don’t have them anymore. The openness of Android vs Apple’s closed restricted approach is really what sets both platforms apart. Both have their pros and cons. I’ll give examples. Because of Apple’s “closed” approach you’ll find that your experience on the platform is usually consistent, i.e if you’re using a third party or a system application you can be guaranteed that some procedures will always be the same, one such example of this is copying and pasting. The procedure of copying and pasting is the same, no matter what application you use.
Another system-wide feature that I love is tapping the status bar in iOS to “jump to the top” of an application. So, let’s say you’re scrolling through some pictures on instagram and you want to get back to the top of the page, you would simply tap the status bar once and it will instantly bring you back to the top of the page. Those are examples of benefits to Apple’s closed nature; a consistent and predictable experience. Now because of this closed approach, iOS is not without its limitations. A couple of which are: system apps like the native calendar, calculator, email, photos, messages, camera etc cannot be changed from being your default app. So, let’s say you downloaded a third party calendar app. You would not be able to set said app as your default application.
These are some of the many annoyance of iOS, but I forgot about those annoyances briefly while using Android. Unlike iOS, you don’t have a consistent experience across applications. For example, copying/pasting text may vary from app to app. I found this extremely annoying. There’s also no streamlined way to jump to the top of an application.
4. Ok, I’m starting to figure things out. It’s not so bad: I decided to look past this and focus more on the virtues of the phone and realized there were many that I liked. Some of which are Android features while others are specific to the Samsung S4.
5. Wow, I love this phone: I love the LED light on the front of the phone that can flash in any color you want ( a particular color can represent a specific notification), I love the S4′s brilliant 5″ AMOLED screen, the battery life is amazing – with tethering on, screen brightness at 100%, GPS on and other features I still managed to go through a whole day with battery life left ( from 8:00 AM to 8:00 PM). I love airview, but found the other features that Samsung is pushing to be gimmicky. I should also note that these features are limited to system apps. Widgets can be really useful on a phone with a screen as big as the Samsung s4′S. See my schedule and my to-do list at a glance is really useful, unlike on iOS where I have to actually open the application to see appointments and to-dos. The ability to add widgets to the lock screen is also a plus.
Another general Android feature that I like is the interconnectivity between apps. This is a really powerful feature that has me hooked. Let’s say you took a picture from your iPhone’s camera and you wanted to edit it. To do this you’d have 1. Take the picture, 2. Open the app you want to edit it in, 3. Browse for the picture in the app 3. Open and edit. The process would be the same for other applications. If you wanted to upload it to Dropbox for example, you would need to actually open dropbox and find the picture to upload it. I should also mention that you’re limited to uploading videos and photos in iOS ( You can however get around this with a little hackery)
On Android the process is much easier. You would simply take the picture and share with any application that supports it. Whether it’s sending it to dropbox, twitter, your picture editing app or wherever.
The S4′s camera is great, but I’ve chosen not to focus on features that have been widely reviewed elsewhere online.
To conclude, The Samsung 4S is a really powerful phone that can be overwhelming at first, but you’ll grow to love it more everyday. If you’re an iPhone user and you’re considering an Android phone to switch to this would be a safe bet. You’ll miss a couple iOS features at first, but you’ll love the openness of Android.
Disclosure: My Samsung Galaxy S4 was a gift from Samsung. This, however, did not influence how I reviewed the phone.
I couldn’t find this anywhere else online so I thought it would be a great reference for the people who care.
These figures may seem negligible to many, but they add up. Especially if you do point of sales transactions regularly. Let’s say you use your scotia card on average once daily, that’s $115.5 weekly, $511,50 monthly or $6,022.50 yearly. Many of us more than one bank so that’s a conservative figure. Also take into consideration ABM charges etc. Another good thing about tracking bank charges is that it’s easy for them to charge you in error without you noticing, especially if you have large balances.
I will add more banks to this chart in the future and also update them as the bank changes them.
Feel free to scrutinize my figures.
The figures quoted from Scotia are for their regular savings account.
You can avoid Scotiabank’s charges (for their POS and ATMs) with their Electronic Access Account with a flat figure of $190 per month
You can avoid all of NCB’s charges (for their POS and ATMs) with their midas plus facility. Unlike Scotia’s $190 charge, NCB’s MPF is free.
Scotiabank charges 2% for all online visa debit transactions.
Scotiabank’s and First Global’s fees will be raised as of May 1, 2013. Chart shows new fees.
If your Jamaica National account goes below $2,500 JM $75 is deducted monthly.
NCB Fee guide: http://jncb.com/docs/NCB_Fee_Guide.pdf
First Global Bank: http://www.firstglobal-bank.com/news/newsarticle.aspx?id=95&cat=1 (Rates are being modified on May 1, 2013, table reflects such. )
ScotiaBank: http://www.scotiabank.com/intl/jm/PDF/about/Schedule_of_rates_v5.pdf (Rates are being upgraded on May 1, 2013), table reflects said charges. )
Jamaica National: I couldn’t find a fee guide from their website so I got the information from their customer. The name of the CSR that I spoke to was Kimberley. Customer care # is 1876- 5343
I’ve been meaning to put these tips on my blog for a while, but I didn’t get around to it until now. These tips were originally tweets, but I thought that it would make more sense to have them on here (easier to reference and for posterity). So, without further ado. The tips:
1. “Networking” at parties is a joke. They’re usually large, loud and nobody’s going to pay any attention to you if they don’t already know you. Owen “Blakka” Ellis responded to this tweet with a line that I liked. “…Folks whispering in your ear, with liquor etc on their breath isn’t networking, it’s ‘not working‘ ”
2. If there’s somebody you want to meet and you have a mutual friend ask them to introduce you. If the person you’re asking thinks you’re a joke they’re not going to put their name on the line for you. You screw up, they look bad. If the person that’s doing the introduction isn’t respected by the person you want to be introduced to then…yeah.
3. Your online reputation matters. Trust me, it matters. Thankfully there are many tools at your disposal to showcase yourself, talents, services etc online. If you don’t have anything to showcase….well. A good starting point is a domain name that bears your name (e.g marcgayle.com, francinederby.com, shanakaybarnett.com, ryanmattis.com etc). A friend of mine, Kimroy Bailey has been doing a great job at this. Check out his blog, twitter page and facebook page for inspiration. If you’re looking for a job this is a great way to impress your potential employer. I inadvertently started working on my online reputation at 15 years old. This has paid off big time for me. Hint, do a google search for “Gordon Swaby” and you’ll see what I’m talking about.
4. Volunteer your time and/or work for free. Great way to get some experience and meet new people. Among other benefits. (hint: Do some reading on The Rule of Reciprocity)
5. Try not to step on too many toes. “Too many” because you’re going to step on toes, it’s inevitable. ( I have a lot of stories about this, but that’s for some future blog post.)
6. It’s your duty to be aware of what is happening in the country (and other countries too) that you live in. Holding your own in a conversation is very important and first impressions matter. Keep informed.
7. And finally….READ. Read the Observer, read the Gleaner. Read tech blogs, read international news, read books etc. No better way to get smart [er].