As Finance Minister Dr Nigel Clarke prepares to outline the Government’s tax programme for the 2020/2021 financial year this afternoon, the Jamaica Chamber of Commerce (JCC) is already making known its budget wish list.

Heading that list is the desire to have a simplification of the tax system, rationalisation of the various taxes and broadening the tax base, resulting in a reduction in taxes and low wage earners being removed from the tax roll. Speaking at yesterday’s Jamaica Observer Monday Exchange, the JCC made known that it has no desire to call for a wholesale abolition of income tax. However, it wants a reasoned approach in sorting out Jamaica’s tax system, which is in need of modernisation.

Dionne Headley, chair of the JCC Taxation Committee and managing director at Syngus Tax, spoke about the need for Jamaica’s tax system to be modernised, pointing to some of the inadequacies.

One such is the need to go through three government agencies in order to get a Tax Compliance Certificate (TCC). She argued that the country’s taxation system in some areas offers a disincentive towards tax compliance rather than an incentive.

“As it regards abolishing income tax, the JCC is of the view that we must do the research before coming to any decision. We don’t want a broad-brush abolishment of income tax but we need robust research,” Headley told reporters and editors at the newspaper’s Beechwood Avenue headquarters. She disclosed that the JCC has already started the work and has approached students from The University of the West Indies for assistance in carrying out the research.

Headley also said that an incremental reduction might be the best approach, for the moment, until the full research is done. Some of the ideas put forward by the JCC, she said, include removing the tax on dividends and implementing a sector-neutral taxation policy.

Headley also cautioned that the elimination of income tax could be problematic for Jamaica with the Organisation for Economic Co-operation and Development (OECD) in terms of landing the country on its blacklist.

She made the point that such a move could be deemed as the Government subsidising local businesses or give rise to other OECD concerns. As such, she advocated a reasoned approach towards crafting a tax system benefiting all concerned.

Headley was supported in this view by Christopher Malcolm of Jamaica International Arbitration Centre. Malcolm drew reference to a case in the British Virgin Islands during his tenure as attorney general in that country. He pointed to some of the difficulties experienced by that country with the OECD regarding its taxation policies.

“If we do abolish [income tax], let it happen in an environment of well-researched corrective adjustment, which might mean a piecemeal approach at times,” Malcolm said.

For his part, JCC President Lloyd Distant declared that his membership is hopeful that there will be some elements in today’s budget presentation by the finance minister such as removal of dividend tax to add to last year’s taxation measures to spur growth. He also wished the minister would announce the removal of some multiple taxation.

Distant agreed with Headley that there is need to simplify and rationalise taxation, thereby broadening the tax base.