Entertainers, authorities argue over tax assessment method

BY CECELIA CAMPBELL-LIVINGSTON Sunday Observer staff reporter livingstonc@jamaicaobserver.com

Sunday, September 05, 2010

THE Inland Revenue Department's recent seizure of high-end motor vehicles owned by entertainers has brought into the spotlight the issue of tax assessment. But even as the tax office and the entertainment industry argue over the methodology, the authorities are seeking to assure the public that the confiscation of property is a last resort.

According to Meris Haughton, director of communication at the Tax Department, if people have a challenge making the payments they can make arrangements to pay. "But once they have done that, they are expected to stand by that agreement," she pointed out.

The Sunday Observer spoke to Haughton in the wake of the seizure on Friday, August 27 of two expensive vehicles owned by dancehall deejay Rodney Pryce, aka Bounty Killer, reportedly for owing millions of dollars in taxes.

That seizure followed the July 20 confiscation of deejay Elephant Man's Mercedes-Benz, allegedly for the same offence.

Both actions revived memories of the long, drawn-out case with Moses Davis, aka Beenie Man, regarding his taxes in late 2007.

The move by the tax authorities has created a stir in the entertainment industry and some entertainers have complained that even though they have filed taxes, the tax department's figures are somehow always higher.

Haughton, though, has a simple explanation for this. "Some file and under-report," she said.

"Jamaica has a self-assessment system. Once you file, the audit and assessment team will have to look at the info to see if it's true," she explained. "They (entertainers) are assessed similarly to any interest group. Different sources are used to arrive at a person's income -- primarily where they do not file returns."

Responding to claims that entertainers are being unfairly targeted, Haughton said that was not the case as the same rule applies across the board.

Asked what method is used to assess individuals, Haughton said: "From our intelligence-gathering data mining, the Intelligence Unit unearths info from different sources which gives us the profile of a taxpayer, not just entertainers. There is a general approach that we use."

Some entertainers, however, believe that that methodology leaves room for them to be over-charged by the tax department.

In an Observer article entitled 'Performers' views mixed about the value of paying taxes', female deejay Charmaine Munro, aka Macka Diamond, pointed out that her earnings could not be assessed by the number of performances she gives -- which is one of the methods used by the tax authorities to audit entertainers -- saying several of her shows were done without pay, especially for charitable causes.

"Most of the shows that you see we perform on were free, not much money is in the industry right now," she said. "But we still have to entertain our fans."

Shocking Vibes CEO Patrick Roberts feels that a different method should be used to tax entertainers as the current method leaves a lot to be desired and puts the artistes at a disadvantage.

"In all honesty, how do you determine what an artiste makes in order to calculate a percentage?" he asked. "Seeing them appearing on flyers doesn't tell you what they are earning -- it could be free as well as they could be heavily discounting their fees."

The entertainment industry, he said, is all about hype. "A lot of times you see artistes flexing a certain way and it's just to maintain the image."

"I am at no time advocating the non-payment of taxes, but the reality is that you cannot pay what you do not earn," Roberts said.

Roberts told the Sunday Observer that in dialogue with the Tax Administration Department he learnt that the tax assessment is mainly based upon shows on which the authorities see the artistes appearing.

"Sometimes you get advance and the show doesn't work out, the artiste has to use his discretion and forego the rest of the fee," he said. "Sometimes artistes just need to maintain a presence in the business, so they will ask promoters to include them on the line-up ... how do you assess that?" Roberts asked.

The solution, he said, is for the tax department to set flat rates for artistes. "They should have different rates for artistes -- from the more established ones to the upcoming ones," Roberts suggested.

Meanwhille, Haughton was at pains to emphasise that the tax department is not about embarrassing people by seizing personal property. It is not something that the agency enjoys, she said.

"Enforcement activities go across the spectrum, not just for entertainers. We are trying to encourage them to pay their fair share," Haughton stressed.

Tax evasion is an indictable offence under Section 99 of the Income Tax Act which states that "any person committing tax evasion, which is a type of fraud, is liable, on conviction, to a fine not exceeding $10,000 and treble the amount of tax with which he ought to be charged, or to imprisonment for a term not exceeding five years.

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Entertainers, authorities argue over tax assessment method