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An opportunity for wider reform

ID: INTERACTIVE DIALOGUE

David Mullings

Sunday, January 20, 2013    

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Jamaica is on the cusp of major changes that will shape the next 50 years. This is a clear opportunity for wider reform that addresses some festering issues. On April 15, 2012 I wrote a column titled 'Cultural reform, not just tax reform' putting forward my belief that even if Jamaica were to finally see comprehensive tax reform, which has been repeatedly presented in various reports, the country would still have fundamental problems to address because of things that have taken root culturally, especially in Government.

While Jamaica is very different from Greece in many ways, especially because we have a primary surplus — meaning our tax intake is more than the expenditure to run the Government, excluding debt servicing (Greece does not have a primary surplus) — there is one major similarity: Like Greece, Jamaica suffers from rampant tax evasion.

Some initiatives have been launched to collect more taxes from registered businesses, and corporate tax has been lowered for most sectors. A unit was set up in Tax Administration Jamaica to pursue specific professions that have traditionally avoided taxes and we expect to see more things put in place this year, since it is clear that the Government intends to have a higher surplus going forward.

Last week I wrote about the Chongqing model that has seen amazing growth in that Chinese city, thanks to responsible use of taxes, a crackdown on corruption, and support from the local citizenry. While I do agree that there are definitely large sections of society that are not contributing adequately via taxes to the running of the country, it would also seem that none of those three pillars from the Chongqing model have ever been included when enacting reform in Jamaica.

Those persons who pay their taxes and those who do not make the same complaints when it comes to what the Government does with their money. The level of waste, the accusations of corruption and the quality of service do not seem to have changed much over the years. The classic example of repairing a road, only to have it dug up to lay some pipes and not repaved properly thus leading to new damage and additional expenditure, is still evident today. It comes across as disrespectful of the taxes citizens have paid.

The service provided by some Government departments and unpleasant way citizens are so treated are also cause for concern. Why should our expectations for customer service or timely attention to an issue be much lower because it is the public service? Why have we not seen any real crackdown on corruption at all levels? How many times have we heard a Government say that a certain tax is to be implemented and the money will go into a certain fund, only to find out that money was diverted elsewhere? That simply cannot continue, and citizens need to be far more vocal about demanding that rules be followed.

Chongqing ensured that residents had little reason to question the authenticity of a drive for efficiency and transparency by addressing corruption head-on. If you see corrupt officials at many different levels being dealt with, you tend to believe that your tax dollars will be more efficiently spent in the future and that there is a real drive for improvement. In Jamaica we are more likely to believe that our tax dollars are often wasted and those in power are hardly concerned about turning that around.

As more taxes are piled on to citizens or services reduced through reduced expenditure, compliance will become more of an issue if reform on the expenditure side does not take hold and is made visible for all to see. Taxes are paid by citizens for the services the Government provides to them. If the Government is inefficient or incompetent at providing some services, then citizens will naturally question the level of taxation they are faced with.

I genuinely believe that Jamaica would have much higher tax compliance if people believed they were getting value for money, that waste was being reduced and that corruption was being addressed. Until the Government addresses these concerns, it will be hard to expect a different outcome and influence the culture of tax evasion.

David Mullings was the first Future Leaders representative for the USA on the Jamaica Diaspora Advisory Board. He can be found on Twitter at twitter.com/davidmullings and Facebook at facebook.com/InteractiveDialogue

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