Editorial

Why is the Gov't afraid to go after tax-dodgers?

Friday, April 25, 2014    

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IF the Government had thought that initial opposition to its iniquitous tax on withdrawals from financial institutions was a flash in the pan, it would, by now, have come to the conclusion that the proposal is very unpopular.

The latest group to add its voice to the howls of protest against this tax is the Jamaica Bankers' Association, which represents the sector that has been placed at the centre of this madness. According to the bankers, imposing a tax on withdrawals from deposit-taking institutions and encashments from securities dealers may discourage some individuals and businesses from utilising the formal banking system.

That, of course, is not far-fetched. In fact, people on the streets of the capital, Kingston, are already talking about doing just that. Some, most naturally, are stating that intention in jest, however, the Administration would be foolish to shrug off such talk as pure banter.

Concern over that sort of state of mind should, we believe, be occupying Finance Minister Dr Peter Phillips' thoughts and should cause him to look seriously at the suggestions made as to how the Government can generate the $2.25 billion it needs to help plug the $6-billion hole in the budget.

Since Minister Phillips' announcement of the tax last Thursday there hasn't been a shortage of suggestions for alternative means of raising the money.

We have already reported and stated our agreement with the proposal by Mr Christopher Zacca, the Private Sector Organisation of Jamaica president, that the Government should look at increasing the recently-implemented minimum business tax.

According to Mr Zacca, that measure has the potential to bring in the amount of funds needed by the Government.

Mr Audley Shaw, the Opposition spokesman in finance, in his budget presentation, recommended that the Government cut inefficiency in the bloated State bureaucracy.

However, most commentators, including this newspaper and the Bankers' Association, believe that the Government needs to place more emphasis on, and pump resources into increasing tax compliance.

The Bankers' Association, in its statement on the matter, pointed to the fact that only 10 per cent of all registered companies in Jamaica file corporate income tax returns.

In addition, the Private Sector Working Group, in an analysis two years ago, informed the country that only 28 per cent of the 62,000 firms on the Companies Office of Jamaica list are registered for tax purposes.

That, we hold, represents a failure of the Government to collect all that is due to the State. It also represents a lack of will to go after tax dodgers.

What, we would like to know, is scaring the Government from pursuing those who won't pay, who refuse to pay?

Why is the Government continuing to increase the burden on the already tax compliant, while allowing others to go scot-free?

Every Jamaican who is gainfully employed or who runs a business has an obligation to contribute to funding the country's operations. The Government, therefore, has a duty to ensure equity in that responsibility.

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