The resources of the National Housing Trust could be used to facilitate youngsters owning their homes.
On June 28, 2016 I rose in Parliament and said this: “We must retain our skilled youth in Jamaica. We are losing too many of our best and brightest to overseas opportunities. We have to come up with incentives to keep them focused on building Jamaica. One such approach is to have the National Housing Trust (NHT) build rental units specifically for our tertiary graduates. These rental units would be available only to our young people between the ages of 20 to 30, during which time the rental rate would be 25 per cent of their salary, single or combined, whatever that salary happens to be. So that young people would be assured that whenever they leave university they can find a place which is of a quality standard to provide the stability to build out their lives at a price they can afford. As the asset remains with the [NHT], the rental cost would still contribute positively to their bottom line while giving our young people an opportunity they truly deserve.”
This solution was among several I gave that day that was essential to building the morale and enthusiasm of our youth population and their belief in their future in Jamaica.
Let’s look at another alternative even more beneficial to both the public and the economy.
Under our current laws, if a company buys a car it receives a capital allowance of 12.5 per cent annually against its taxes payable. In other words, in eight years, that company can write off the cost of the car purchase against its taxes.
This law provides incentives for purchasing cars for employees and, in turn, the employees are given the option to purchase these cars at the end of the eight years at book value or for $1.
Let us consider the full impact of this incentive:
* The car is made overseas, for example, in Japan, which has created jobs for Japanese workers.
* This car has added value to the Japanese economy, wherein its workers pay income tax, state and city taxes, and contribute to Japan’s gross domestic product and exports.
In effect, Jamaicans are paying for an incentive that benefits the Japanese economy.
Why are we not applying this same principle to the Jamaican economy?
This means that if a Jamaican company bought a house for an employee at the capital allowance rate of 2.5 per cent, it would take them 40 years to recover that cost. But what if we applied the same car purchase capital allowance rate to a house for that company? Then the company would have the option of giving a house, rather than a car, to the employee.
Therefore, if Jamaican companies had this option, it would provide more benefits to the country and the employees, instead of only providing them with a company car.
First, the house provides construction jobs in Jamaica and all other associated jobs in the design, construction, and sale of the property. It also increases the government tax base through more Customs duties, General Consumption Taxes (GCT), employee income tax, land taxes, and continued income to utility companies.
Moreover, this incentive would go a long way towards giving our people peace of mind about their future and staying in Jamaica. As a state, the Government would be giving up nothing, as over time it would be recovering more in taxes than they give up.
By restricting it to new construction, people who do not already own a home, and limiting the benefit to houses or apartments under $50 million, the Government can easily monitor and control this means of financing homeownership to guard against abuse.
Second, if companies were to give this benefit to their employees it would create essential incentives for developers to build more homes.
Shouldn’t we incentivise jobs in Jamaica rather than overseas jobs?
In 2022 Jamaica imported more than $47 billion worth of cars into our marketplace.
In 2023 the most significant increases in employment by industry group were in ‘Real Estate and Other Business Services’ and ‘Construction’. There were 152,600 people working in ‘Real Estate and Other Business Services’, an increase of 22,000 (16.8 per cent), and the ‘Construction’ industry employed 133,200 (16.9 per cent). (Jamaica Information Service)
Just imagine the impact of increased employment and economic growth we would achieve by giving Jamaicans the same incentive that we technically offer to overseas care manufacturers. Put another way, because companies can write off the cost of a car against its income and not a house, it promotes car production overseas rather than housing consumption and sales here at home.
There is now a global priority of providing affordable housing. Corporations that provide long-term bond funding for affordable housing in the United States of America can offset or deduct those bonds against their corporate income tax. Additionally, Vice-President Kamala Harris has gone further by offering a US$25,000 government grant for first-time home purchasers in her economic plan should she become president.
In Jamaica, we have done very little in this area to give Jamaicans an opportunity to own a roof over their heads. For decades we have enshrined old, institutional, archaic, comfortable modalities that negate progress rather than thinking outside the box to move Jamaica and Jamaicans forward. Today it is easier for someone in Jamaica to instantaneously get approval for a car loan versus a house loan. It is almost an insult to someone who has been paying their rent for years to be asked by a bank to prove they can pay a mortgage for the same amount. Moreover, many of our young graduates cannot pay the down payment for a home or the rental costs now in the marketplace. As a result, our people, especially our young people, are tired of the ‘same old, same old’ standards which have offered them little opportunity for upward social mobility and a productive economic future.
It is time we began thinking creatively about many issues in this country. Otherwise, we will continue to see our people leave our shores hoping for a better way of life and living standards.
Lisa Hanna is Member of Parliament for St Ann South Eastern, People’s National Party spokesperson on foreign affairs and foreign trade, and a former Cabinet member.
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Publish date : 2024-10-19 18:05:00
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Publish date : 2024-10-20 06:55:15
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