“Building Efficient Tax Administrations in promoting national and regional development.”

Name of Entrant: Rémon Akiem Goulbourne

A tax, as defined by the Collins English Dictionary for Advanced Learners, is; “an amount of money that one has to pay to the government so that it can pay for public services.”

Taxation, as defined by the same source is; “the system by which a government takes money from people and spends it on things such as education, health and defence.”

Efficiency is the quality of being able to carry out tasks with little or no energy wastage. Therefore, the efficacy of a tax administration is dependent on its ability to collect adequate amounts of money from the populace and diligently spend this capital to the people’s benefit.

Taxation has been a part of human life for many centuries. The great civilisations of the Egyptians, Incas, Mayas and Romans implemented methods of taxation. The Egyptians subjected the Israelites to oppressive taxation while the Ghanaian kingdom taxed trade routes through Western Africa. The taxes imposed by these empires played a major role in the funding of many magnificent structures remaining today as reminders of civilizations past.

We need a taxation regime that is built for and by the Caribbean. We have settled with an underperforming regime plagued by high delinquency rates and administrative costs. Our economies also need major restructuring. We are importing too many goods while manufacturing too little. We have become westernised — building magnificent structures, acquiring expensive vehicles and costly yet underutilised gadgets — without realising the goals promised by westernisation.

The new tax administration must be comprehensive but not burdensome. As colonies, we experienced taxes aimed at extracting wealth and transferring it to England. Therefore we must be aware of overtaxing ourselves; as this would cripple our economies and give an economic advantage to foreigners.

Firstly, we must create a balance of simplicity and complexity in our new, more efficient taxation system. The present Jamaican system has areas that are excessively complex and areas that are too simple. This is a contributing factor to the relatively low compliance rates for various fees and the citizen’s ignorance of certain aspects of the system. Complexity may also lead to excessive administrative costs. We need an incorruptible system that is not overly bureaucratic. Whether it includes the filing of taxes or it uses a withholding technique, there should be little room for loopholes and should be easily marshaled.

Balancing the taxation burden across the society has not been mastered by many countries. Taxes imposed should be based on one’s ability to pay. Taxes should not burden citizens, but act as affordable contributions to the nation’s wellbeing. The upper echelons of the society cannot be excluded from contributing, as they do benefit from tax expenditure. The taxation system should facilitate the redistribution of a portion of the excess wealth gained by the society. This excess would be used for the good of the people. Specifically, this money should be spent on improving underdeveloped locations. This should be apart of government policy, it should not be done simply at the government’s convenience or to gain a political advantage.

One popular suggestion is the reduction of income taxes and the increase of consumption taxes. This suggestion has positive and negative components. Reduced income taxes may benefit the richer groups more than their poorer counterparts, while increased consumption taxes affect lower income groups more. However, this could decrease the abuse of the taxed substances and the negative effect on the poor could be offset by increasing the social safety net.