Encourage entrepreneurship among the young
I have been deeply concerned about the new tax package. Professionals like myself have spent a small fortune to fund our education. Our main concern after graduation is how to make a gainful living. Where can students find employment that gives them the ability to pay their bills, save a little, and still remain independent? Gainful employment is simply hard to come by in Jamaica.
Difficulty finding employment may not be a new concept in Jamaica. However, the situation is far worse for the generation that was born in the 80s and 90s. While we were children, the Jamaican economy was steered into a complete meltdown. During Jamaica's financial crisis of the 90s, banks and insurance companies collapsed and over 40,000 small businesses were forced to close. An entire generation of Jamaican entrepreneurs disappeared. These were the private sector entrepreneurs who were supposed to employ my generation. With the government's wage bill now stretched beyond its limits there is no assurance that young people will be able to find employment in the public sector either.
The way forward is to encourage entrepreneurship among young people. Using their knowledge of cutting-edge technology, young people have the ability to revolutionise business in Jamaica with very little start-up capital. Unfortunately, the new minimum tax of $60,000 on registered businesses discourages enterprise among young entrepreneurs, some of whom are starting in the red because of student loans.
The tax may not seem like much, but it has the potential to be devastating to micro and small businesses. The one-year grace period that is allowed after the businesses are registered does little to cushion the effect, as it may take longer to generate any significant profit. Businesses may be forced to let go of one low-skilled worker in order to accommodate the tax requirement, which works counter to the well-intentioned request that each business hire one additional person.
I understand that there are businesses that cheat the system by claiming they don't make a profit when they actually do. However, the new minimum flat tax is not an acceptable solution to this problem. Instead of discouraging enterprise with more taxes, the government should be more focused on investigation of those companies that are underreporting. It is the tax dodgers who should be penalised, not those who play by the rules. I sincerely hope the government revisits the proposed minimum tax requirement and dedicates more of its resources to promoting entrepreneurship.
Stephen RP Edwards