LAST week I was fortunate enough to attend a public forum on the Private Sector Working Group’s (PSWG’s) comprehensive tax reform proposal hosted by the Mona School of Business. Presentations were made by Joe Matalon, Wayne Chen, Ralston Hyman, Dr Tomoya Christie and Dr Damien King, all with varying views about the proposal.

Many people point to the current system as being unfair, overly complex and uncompetitive with our neighbours in the region. They also point to the consistent shortfall in each budget and the massive tax evasion that exists. All the tax reform proposals seek to solve these problems.

I agree with all the above, but think that too many are missing the elephant in the room: mismanagement of public funds. It is true that if the Government of Jamaica could collect the taxes owed, such as from some of the professionals, the self-employed and the companies not registered for tax purposes, then there would actually be no budget shortfalls and we would not run a deficit.

The various reform proposals seek to solve the problem of revenue for the Government, but during the question-and-answer session I asked the panel, and specifically Mr Matalon, what had changed in the last few months to make them believe that after decades of public waste and mismanagement by successive administrations, the newly gained revenue would be better managed.

He replied by quoting the first paragraph of the introduction to the PSWG tax reform proposal: “Any major comprehensive programme of tax reform (and particularly, as is the case here, one that is significantly revenue positive) will not gain societal acceptance unless government simultaneously demonstrates that taxpayers will receive value for their money. The reform should therefore be accompanied by a series of corollary measures that will provide the assurance that:

(1) All public expenditures are subject to transparent processes of prioritisation and justification;

(2) Public goods and services are delivered in ways that maximise efficiency and minimise waste;

(3) Corruption in the public and private sectors is effectively combated with appropriate sanctions imposed on guilty parties irrespective of their status in society.”

He went on to add that we the public must be vigilant in ensuring that the Government is held accountable for the use of our tax dollars. Notice that he did not answer my question; instead he pointed out that they did realise the elephant in the room which would have to be dealt with “simultaneously”.

Dr Christie posited that Jamaicans had a cultural disposition not to pay taxes, but Dr King disagreed, saying that we were no different from other countries where citizens seek to minimise their tax bills. He instead believed that the system was too burdensome and complex to encourage compliance. The system made it easier to evade than to comply.

I agree with Dr King that it is not cultural, but I think it is as simple as lack of motivation. When you tell me that a portion of the special consumption tax on gasoline, the “gas tax”, goes to the Road Maintenance Fund but then some of that money is diverted and the roads look

the way they currently do in many parts of the island, I clearly will wonder where my money is going. Citizens who do not believe they get value for tax dollars will naturally seek to minimise the tax dollars they pay.

Any country that has high public corruption and waste has high tax evasion. It is not wrong to think that since the Government will waste it you might as well keep it for yourself, because you can do something more worthwhile with the money. All the tax reform proposals put forward solve the revenue problem

the country faces and makes the business environment more competitive.

I liken it to a swimming pool that does not have enough water for people to swim in. Adding more water to increase the level is like increasing total tax revenue. Of course, the pool has a leak and that is why the water level was low in the first place, so adding more water might work in the short term, but fixing the leak is really the solution that needs to be implemented.

Adding more tax revenue to a system that mismanages current tax dollars only solves the revenue problem when the real problem to be solved is inefficient government.

Comprehensive tax reform (not piecemeal reform) is badly needed, but better management of taxpayer funds is even more critical. Do you believe that enough has changed so that there will be reduced waste and corruption? What specifically gives you more confidence that taxpayers will now, after 50 years, suddenly start getting value for money?

David Mullings was the first

Future Leaders Representative

for the USA on the Jamaica Diaspora Advisory Board.

He can be found on Twitter

at twitter.com/davidmullingsand Facebook at facebook.com/InteractiveDialogue