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Over-taxation, corruption and tax reform
Adjust the traffic fine system to differentiate between seriousand incidental breaches, suggests Walwyn Francis
Business
Contributed by Walwyn Francis  
October 10, 2013

Over-taxation, corruption and tax reform

While it is the responsibility of every resident to contribute to the civil services that the government is elected to provide, there is a point beyond which the citizen simply cannot give.

The Jamaican saying “you can’t get blood out of stone” is apropos. The more a government taxes its people beyond this taxable limit, the more persons turn to corruption as a means of survival. It is impossible for country to fight corruption successfully when its nationals are reeling under high inflation, high taxation and low income, and therefore cannot see any legitimate way out of their plight especially when good jobs are scarce. Oppressive taxation breed corruption which sets the stage for crime and violence to fuel the resultant negative international image of a country that is significantly dependent on tourism.

The PAYE worker is cornered and will seek any way out that presents itself and, regrettably, this includes those who are sworn to protect us from corruption. If it is true that there have been instances of corruption in the police force then this is classic corruption by definition – the use of Public Resources for Private Gain.

In fairness, though, the vast majority of the force is not corrupt. Consider the anecdote where motorist told that he was stopped for not displaying a license sticker and produced the sticker which he had not yet installed. The policeman said that it was an offence to drive without the sticker, asked permission to enter the vehicle and installed it for the motorist and said he was giving him a break, wished him a good day and walked away. The driver did not believe at any time that he was being asked for anything.

The good cops must be aware of the bad cops among them. If the bad cops are a small minority then the majority of good cops should be able to weed out this diminutive number of their members. Do they just, however, turn a blind eye out of fear of whom they are up against? The prayer “the Confiteur” includes “[God] forgive us for what we have done and for what we have failed to do”. The conclusion is that the sin of omission may be as bad as the sin of commission and so the “good cop” may have to bear some of the criticism against the force.

Traffic violations are so prevalent on the roads of Jamaica, that this should make significant contribution to the coffers of the government, but there never seems to be a cop around to legitimately enforce the law. The obvious solution is cameras which are now used worldwide to the extent that one can receive by mail a photo of himself going through a red light! This technology is no longer expensive and would pay for itself in a short time.

Minister Peter Phillips, should consider the following and recognize that these initiatives could very well increase government revenue and, because a stable economy with reduced crime and violence, could inure to the benefit of the tourism, financial sectors and business in general.

* Consider the bold step in the tax initiative schemes of ending Income Tax and, instead, make GCT chargeable on everything. Many small very successful economies do not collect income tax eg. Cayman, Bermuda, Bahamas, Isle of Man, Panama, Leichtenstein Monaco Luxembourg and many others and in Ireland and Netherlands income tax is so low that these (and other similar nations) can be considered to be tax havens.

(wiki.answers.com/Q/What_countries_do_not_have_to_pay_income_tax)

“The U.S. National Bureau of Economic Research has suggested that roughly 15% of countries in the world are tax havens, that these countries tend to be small and affluent, and that better governed and regulated countries are more likely to become tax havens, and are more likely to be successful if they become tax havens. So, in many instances you will find yourself in a low crime area if you are in a country that does not tax its citizen’s labor…..”

In some Central American Economies taxation is only on what one has saved over the year – i.e. the amount the citizen has earned on which no consumption tax has been paid. The PAYE Jamaicans would have a choice to pay taxes in synch with their lifestyles. Of course, a program to end income tax should be in association with a determined but reasonable policy to collect all outstanding income taxes before finally closing down that system.

* Adjust the traffic fine system to differentiate between serious and incidental breaches – for example distinguish between “moving” and “non-moving violations”. Reduce traffic fines to say $500 but make it mandatory that after 3 moving violations or 6 non-moving violations in say one year, offenders must be brought before a judge who can apply a fine of up to $15,000 which the government would be more likely to collect. A good way to ensure collection is to make the fine against the automobile as was done in Singapore. Thus, if one fails to pay the vehicle can be sold. The government already has such a policy with the NWC whose bills are against the property supplied! The same principle should be applied to the cigarette fines proposal

Corruption is a worldwide problem and cannot be eliminated overnight or, perhaps ever, but it must be contained and minimized and the citizens should not be burdened with higher and more taxation caused in part by crime and inefficiencies. This will just be a vicious cycle. It will not work and we do not have the luxury of time to make more wrong moves.

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