Taxation or Extortion: Banking Charges and Taxes crippling the Ordinary Man

By Kymberli Whittaker

Effective June 1, 2014, a new tax will be imposed on all withdrawals from deposit-taking institutions through electronic banking, point of sale transactions (debit cards), cheques, banking hall transactions, ABMs, ATMs, ETMs and internet transfers. The only exception is internet transfers made by a person between his accounts in the same financial institution.

This move has been made in a context where Jamaicans have been pleading for relief from an unprecedented increase in Commercial Bank charges and fees. In an interim report to Parliament, the BOJ said fee income, not including fees for loan processing, now accounts for the larger percentage of total revenue for commercial banks.

For the nine-month period January 1, 2013 to September 30, the BOJ said total fee revenue stood at 19.5 per cent. Fee revenue was recorded at 16.6 per cent in 2012, 13.6 per cent in 2011, and 14.9 per cent in 2010.

The report, which was prepared for the Economy and Production Committee, indicates that the portion of income earned by commercial banks in relation to overhead expenses is the highest in six years. It further shows that in terms of cost recovery, fee income, excluding fees for loan processing, moved from 26.4 per cent in 2008 to 28.6 per cent last year.

It is evident that the commercial banks are looking to increase revenue and the government is looking to increase revenue all at the expense of the law abiding citizens. Banking is a business however where do we draw the line in what is acceptable?

This move to tax withdrawals will affect the group least protected by our Government, the middle class who bear the brunt of the financial burden of this country. This dwindling middle class who is already lawfully paying income tax and other sums which are diverted to mismanaged institutions in the name of attaining growth and stability. Money diverted to pay for roads with huge potholes, to pay exorbitant fees to the money making entities which have been divested by our government in the name of them making a profit, not breaking even.

The local think tank Caribbean Policy Research Institute (CaPRI) has stated that Jamaicans are not paying an unreasonable amount for bank fees, despite the significant rise in fees. In a report following a recently -concluded study, CaPRI said, "When viewed holistically, it is clear that for most of the commonly charged fees, Jamaican banks compare favourably with the banks sampled from other countries."

I assure CaPRI that the dynamics of other countries in terms of the financial spending power of their citizens are not comparable with ours, so referencing  countries, such as Barbados is not an appropriate measuring stick. Their minimum wage can go much further than ours, as I lived in that country myself for two years.

Mr Hylton, Group Managing Director  of the NCB told the  Economy and Production Committee of Parliament  that bank's fees and ratio of fee income to other income are competitive based on local, regional and international benchmarks, it is important to note that our salary and our standard of living do not compare relatively to these same benchmarks.  The people using the commercial banks here in Jamaica are the same ones who are affected by wage freezes, pay cuts etc, no employment, etc.

"Every mickle makes a muckle", and it seems as if no one desires that the working man keeps his mickle. Our salary is taxed prior to being deposited in the bank by our employers, it is subject to banking rates and taxes while in the bank and it will be taxed upon withdrawal of sums for our livelihood. What is the aim of the government? To decrease the revenue of the bank as a result of the foreseen preventative actions of many who will choose not to deposit their few dollars in the bank. Many persons bank for safety reasons, what are the perceived repercussions?

Many people say the ruling party, the PNP is not a government for the poor, I believe they are because the persons living in abject poverty will not be affected by the majority of their decisions. Who is affected? The middle class or the ordinary man.  We are being penalized for earning our money, saving our money, and spending our money.  What more do you want from us?

Jamaica needs a Revolution.