BY CONRAD HAMILTON Sunday Observer senior reporter firstname.lastname@example.org
TRADE unionists have sounded a warning that they won't embrace any new tariff measures unless the Government intensifies efforts to nab tax dodgers.
Amidst plans by the Simpson Miller Administration to impose another round of tax increases on Jamaicans in short order, two senior members of the country's trade union movement are demanding more stringent tax collection to give the 350,000 Pay As You Earn (PAYE) workers, who are shouldering most of the tax burden, a break.
Their warning comes days after Finance Minister Dr Peter Phillips indicated that new tax measures were being considered by the Government as it seeks to reduce the country's debt in keeping with commitments it intends to give the International Monetary Fund (IMF), with which it has been in loan negotiations for over a year.
The appeal from the trade unionists echoes sentiments previously expressed by several stakeholders, including the Private Sector Organisation of Jamaica (PSOJ) and civil society group, National Integrity Action (NIA).
In a public statement on the matter last year, chief executive officer of the PSOJ Sandra Glasgow declared that companies that are not fully tax compliant would be booted from the organisation.
In a similar statement last year, the Trevor Munroe-led NIA argued that the Government should pressure tax evaders regardless of their connections and however positive a corporate image they may portray.
"What is beyond dispute, as the NIA has been pointing out, is that tax evasion, particularly by large taxpayers in Jamaica, is a major contributor to the inability of successive administrations to relieve the inordinate burden on PAYE taxpayers as well as the incapacity to pay teachers adequately, to provide the police with the necessary vehicles, and to acquire and maintain appropriate equipment for hospitals and clinics to serve the people's health needs," the statement said.
Granville Valentine, general secretary of the National Workers' Union (NWU), is adamant that the Government tighten the noose on tax delinquents before it moves to place an additional burden on PAYE workers whose taxes are deducted at source.
"You will have to first fix the tax net before you can implement more taxes on a group of workers who are already paying almost 50 per cent of their earnings in taxes. If it can be taken from those people, why is it that we can't collect from the other people?" Valentine asked as he spoke with the Jamaica Observer.
Valentine, who is a member of the governing People's National Party (PNP) and who unsuccessfully contested the 2011 general elections, is not satisfied with the enforcement efforts of Tax Administration Jamaica (TAJ). According to him, many tax dodgers are up and about the country earning millions of dollars but are refusing to pay their fair share of taxes.
"You know how many people not paying over NHT (National Housing Trust), NIS (National Insurance Scheme), or HEART deductions that they take out of workers' salaries? Added to that, there are those who earn mega-millions and don't pay over a dime in taxes, and you are now saying that PAYE workers will be asked to pay more," Valentine quipped, as he indicated that he has raised the issue with senior members of the Simpson Miller Administration.
He is suggesting that in going after tax dodgers, TAJ should not ignore persons' lifestyles and should take steps to determine whether some citizens' way of life is in keeping with what they say they earn.
"We must come to a place where your lifestyle has a relationship with your earnings, and, by extension, your taxes. You cannot be spending $10 million but you say you are earning $2 million, unless there is another source. "Your liquor bill can't be $200,000 and you say you not paying your taxes. How can a man whose wall around his house is 10 times the cost of that house, and who drives several high-end vehicles get away with paying the same amount of tax as the nurse, or a teacher, or a regular factory worker? We need to make sure that people's taxes are a true reflection of what they earn," Valentine argued.
He called for audits to be carried out on the offices of professionals, including lawyers and doctors, and on the operators of business establishments, many of which are flouting regulations governing the payment of taxes.
"We cannot have a man bringing in a yacht engine at the ports and declaring that it's an engine for agricultural equipment in order to avoid paying taxes. What kind of system is that? The shakers and movers, the big trousers, the rich people, boast and beat them chest that they don't pay their taxes, and I believe the entire country should rally around the Government to make sure that they do," said the NWU general secretary.
Valentine said he believes the TAJ should adopt the approach used by the United States Internal Revenue Service (IRS) to apprehend tax cheats.
He is being supported by president of the University and Allied Workers' Union (UAWU) and Government Senator Lambert Brown.
"Just as we tried to enforce an amnesty on traffic tickets and 21,000 persons rushed to pay on the last day of the amnesty, once people feel that you are going to take punitive measures for non-compliance they will comply, and so enforcement is critical, and I agree with those who say we should adopt as much as we can from the IRS," Brown said.
He emphasised the need for any new tax measure to be equitable in the interests of working-class Jamaicans who he feels bear most of the tax burden due to their expenditure on heavily taxed food items.
While acknowledging that there is room for improvement in tax collection, director of communications at TAJ Merris Haughton says several initiatives aimed at reducing non-compliance have been introduced.
She added that plans targeting members of the country's professional groups should materialise this year and should result in improvement in compliance. She said that the TAJ's Forensic Data Mining Intelligence Unit, which actively pursues high-profile tax dodgers, will play a greater role in planned enforcement efforts.
Haughton maintains that the TAJ utilises many of the best practices employed by tax authorities around the world, but emphasises that the agency still needs the assistance of law-abiding Jamaicans in its effort to reduce the number of persons who evade the tax man.
"What we would like the public to do, though, is to join the whole process. We can't be the eyes and ears of everywhere, so we would like members of the public who have information to help," said Haughton. "You know that you are paying taxes because you are employed, you know that your neighbour is hiding income, let us know."