Letters to the Editor

Horrid taxes - even patties!

Tuesday, June 05, 2012    

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Dear Editor,

There are few things in life I love more than a juicy patty and even fewer things I hate more than taxes. Yet I believe the new tax being levied on patties is the source of misplaced resentment. Taxes are bad!

Increased taxes are worse; arguing about who should, where the increase should be is a deviation from what matters. Taxes create a disincentive for people to produce as they retain less of the fruits of their labour. Also, taxes make a country poorer because they reduce savings (both personal and corporate) and a society needs savings in order to have capital available to invest.

The amount of capital available to an economy is the difference between a worker digging with his hands, a shovel or an excavator. Clearly a worker digging with a shovel will be more productive than a worker digging with his hands. Jamaica is poor because too many workers are digging with their hands. Too many workers are doing so because the country has little capital, the country has little capital because the country has little savings, the country has little savings because the government takes too much from companies and individuals for them to save. In terms of taxation, Jamaica is currently ranked 30th out of 32 Caribbean and Latin American countries (http://www.doingbusiness.org/rankings). Jamaica being overtaxed is a significant reason for its poverty.

However, taxes are merely the symptom, not the disease; government spending is the disease, or rather Jamaicans' desire to get something for nothing. The political party that promises the most "free" stuff wins, and hence politicians promise "free" stuff. But to pay for all the "free" stuff, they must place future generations in debt. How some parents can look at their children without being overcome with shame and guilt is beyond me; currently half the country's taxes go to debt payments for the past "free" stuff some political charlatans promised and which selfish, naive voters asked for.

Paying for the "free" stuff also means taxing away any hope of economic growth. The new tax package has increased the taxes on hotels which, as an industry, still has a lower tax rate than the other industries, which probably indicates why hotels are one of Jamaica's largest employers. Hoteliers argue that previous tax increases have forced hotels to close and this current tax increase will have the same effect.

Now imagine if the hotels which pay a lower tax rate have problems operating in this tax environment, how then can we expect other industries which have to pay higher taxes to flourish? If the new tax means fewer jobs in hotels, how many jobs are being taxed out of existence in the other industries? Taxes are the result of the "free" things all politicians promise to win elections. We must be more savvy and realise "free" means higher unemployment; lower gross wages because the company can't afford to invest in technology to make you more productive, lower net wages because the government is going to take a chunk of your pay and everything you want, even patties are going to be more expensive because of additional taxes.

Clevon Meikle






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