Young entrepreneurs welcome tax-waiver proposal but urge strategic implementation
Published:Sunday | March 23, 2025 | 9:45 PMEdmond Campbell/Senior Staff Reporter
While welcoming the parliamentary Opposition’s proposal to waive taxes for three years for new players in the micro, small and medium-sized enterprises sector if it forms the next government, an association comprising young entrepreneurs said several factors should be considered to ensure its effectiveness.
Cordell Williams-Graham, president of the Young Entrepreneurs Association (YEA), said the Opposition’s proposals to waive taxes for three years and backload loan fees for DBJ-funded loans would address two critical barriers that hinder business formation and expansion.
In introducing this measure, Williams-Graham said careful structuring would be essential to ensure wide-scale impact and long-term benefits for MSMEs.
Elaborating on the factors for consideration to ensure greater effectiveness, the YEA president pointed out that many MSMEs in their early years generate minimal revenue and may not have reached the taxable threshold and, as such, the benefit could be negligible for some businesses.
She suggested that alternative tax incentives that reduce operational costs may provide broader relief.
For MSMEs that generate significant revenue within the first three years, transitioning suddenly to full taxation after the waiver period could create financial strain, Williams-Graham noted.
She reasoned that a phased tax integration model which gradually introduces tax obligations could be more sustainable.
Highlighting alternative considerations, the YEA president said a more widespread impact could come from introducing tax tiers, lowering the corporate tax rate from 25 per cent to 20 per cent, or even 10 per cent, based on earnings.
“This would create a balanced and long-term incentive structure that benefits both new and established MSMEs,” she added.
The YEA said clear guidelines would have to be established to prevent larger firms from restructuring to exploit the tax waiver, while ensuring that genuine new businesses benefit.
EASE CASH FLOW CONSTRAINTS
Williams-Graham also wants the parliamentary Opposition to outline a revenue replacement strategy. She wants the Opposition to clarify how it plans to offset the revenue loss from tax waivers.
“A policy reversal after implementation could create uncertainty and instability for MSMEs,” she said.
“While these concerns should be addressed, the proposal has the potential to encourage formalisation and support business growth. If complemented by additional incentives, such as low-interest credit and business development support, its effectiveness could be maximised.”
On the suggestion to backload Development Bank of Jamaica (DBJ) loans, the YEA said this proposal is highly practical, as one of the biggest challenges MSMEs face is the high upfront cost of accessing credit.
Spreading loan fees over the loan period, said Williams-Graham, would ease cash flow constraints, making it easier for businesses to invest in operations, hire staff, and expand.
Outlining other potential benefits that could flow from this proposal if implemented, Williams-Graham said many MSMEs struggle to cover upfront processing, legal, and administrative fees. She said backloading fees would reduce the initial financial burden and encourage more businesses to access DBJ-backed loans.
Additionally, the YEA said reducing early financial strain would lower the risk of business failure due to liquidity challenges.
However, the YEA cautioned that if not carefully structured, this policy would increase the total repayment amount due to accumulated interest on backloaded fees. Measures should be in place to prevent excessive cost burdens on MSMEs.
Williams-Graham also signalled that some businesses may struggle to generate sufficient revenue within the repayment period, increasing default risks. She suggested that flexible repayment options, such as bi-monthly or quarterly payments instead of rigid monthly payments, could better align with MSMEs’ cash flow realities.
The YEA president also noted that the proposed policy could include incentives for early repayment to help MSMEs reduce long-term interest burdens.