Dear Editor,

I found the Jamaica Observer editorial of March 10, 2020 to be an excellent, thought-provoking commentary. Our policymakers have studied the issue of taxation ad nauseam; cherry-picking and implementing some items, yet we seem to act so timidly unless we see clear electoral benefits.

Both political administrations have come a long way in reversing the fiscal irresponsibility that resulted in such a high level of indebtedness that we could never before rationally even consider tax reduction as a policy tool. We were borrowing to pay debt!

We took a bold step with the Jamaica Debt Exchange (JDX) initiative, and followed up with phase 2 of the national debt exchange, which were historic and started us on a pathway to where we are now. The statutory tax rate makes it hard, if not impossible, to compete with the informal economy who pay very little or no tax.

Let us acknowledge that a lot has been done, and congratulations are in order for both sides, even though some may successfully argue one side caused a lot of it. But that’s behind us, and it’s up to us to so order our affairs that no administration can easily lead us down that path again — as easily by simply running with it.

For us to achieve the growth rates we need, and to achieve them year after year, we are going to have to find the courage to make big moves and do more than just attract a few big companies. Let’s be aggressive and seize the day. Let us use any fiscal surplus from debt reduction to reduce tax rates. This is an investment in our people and our entrepreneurs that, if coupled with the fiscal responsibility that we are capable of, will result in sustainable growth.

When Jamaican tax rates are at the point at which average entrepreneurs believe it’s worth the risk to invest in small businesses you will find that they are prepared to declare all income and pay a reasonable tax. It is much easier to do so.

High tax rates is an incentive to evade; that’s in every report from every commission that has studied this issue. When you have to compete with the informal sector you usually have to evade to survive. We have made gains on reducing the size of the informal sector, but most small businesses compete with the informal sector and prices drive sales to the informal sector.

We must stop making it so attractive to be in the informal sector, even partially. Believe it or not, you are actually working for the informal sector when you maintain high tax rates. Cries for greater enforcement probably work as well as they do with the domestic murder rate. If we are bold with tax reduction the growth rates will probably be above what we currently dream it can be.

Be bold Jamaica! Imagine General Consumption Tax (GCT) at 10 per cent, but on everything. Imagine income tax at 10 per cent for individuals and 15 per cent for corporations. Agree now to reduce both the GCT and corporate income tax, and PAYE over the next four years to achieve these levels.

Danville Walker OJ, JP

St Andrew