In my article last week I pointed out that purchasing sanitary pads for a minimum wage-earning woman in Jamaica represents six per cent of her monthly salary. Those figures truly got under my skin, so I decided to dig deeper.

On average, any other essential item with a price tag of $3,000 includes a $300 import duty and $400 General Consumption Tax (GCT). These duties and taxes have a tax-inclusive price of approximately $700. Accordingly, a monthly salary of $60,000 means that 1.2 per cent is spent on taxes on this single item.

The tax implications of the same item are 0.094 per cent (less than point one of a per cent) when I compare my salary, which has a monthly take-home pay of $742,000 after paying $300,000 in taxes.

Put another way, the minimum wage earner is spending 12 times the percentage of their salary in taxes than I am on that single item.

There must be a better way.

For example, when we use the Edward Seaga Highway and drive a Class Two vehicle, the round-trip cost to Lydford, St Ann, from Kingston is approximately $7,600, while a Class One vehicle, driving on the same route, pays roughly $3,800 or half the cost.

In that instance, someone from the ‘highway collection regime’ has decided that if someone can afford to buy a Class Two vehicle they should be able to pay a higher rate than a smaller vehicle using the same route.

Obviously, driving a Class Two vehicle rather than a Class One vehicle is by no means an indication of someone’s wealth or lack thereof. Even so, we must start thinking about how we rationalise the charges we are meeting to our population and the stress it is causing so many of them.

WHAT THE GOVERNMENT COLLECTS

I remember receiving my first pay cheque. It was an accomplishment. Yet, I felt angry when I saw the slip attached to it and the amount of taxes taken out of my gross pay — Income tax, National Insurance Scheme (NIS), National Housing Trust (NHT), and Education Tax every month.

I thought, “Wow, this is a lot of money the Government is taking from me.”

We all know that a Government needs taxes to cover the expenses of running a country. Still, when you see how they do it, or when they begin collecting it from your monthly salary, it hits home, and you start to analyse and question the effective management of the country’s progress.

Where are my taxes going?

Is our tax policy fair, or is it outdated?

Is our tax policy even progressive, given where we are?

Imagine if I were asking these questions three decades ago. Given the circumstances and what is happening within the education sector, and the need for more resources for national security and primary health care, especially first-responder services, I continue to ponder whether we should reevaluate our tax policy since we are not growing the economy significantly to meet our basic needs.

Currently, the Government receives its primary revenue from collecting GCT, income tax, Customs duties, transfer tax, property tax, fuel tax, tourism tax, and education tax. Other taxes include dividends and company tax.

For this financial year (2024-25) the government projects to collect $924.37 billion in taxes. Broken down as follows:

• Income Tax – $321.71 billion

• GCT – $300.86 billion

• Customs duties – $66.45 billion

• Special Consumption Tax (SCT) – $99.05 billion

• Travel Tax -$34.14 billion

• Education Tax – $53.62 billion

• Guest Accommodation Room Tax (GART)/Hotel Tax – $3.98 billion

• Other taxes – $44.56 billion

Therefore, we must collectively answer the question: Is our tax policy fair and progressive?

In other words, when we add all the taxes together, what portion of a minimum wage earner’s salary is paid in taxes compared to someone earning 10 times that amount? Should GCT be one rate on food and a different rate on flat-screen televisions?

Or, in the same way, we have a progressively increasing salary tax rate, so why not have the same on transfer property taxes?

Why is a person buying a $15-million home paying the same transfer tax rate as a person purchasing a $150-million home? Or the person living overseas paying the same tax rate for a luxury vacation home?

GCT is the Government’s second-largest revenue generator. I hope the GCT collections are optimal and in keeping with what all merchants and service providers should pay.

In light of my introductory comments regarding the difference in the tax percentages collected from a minimum wage earner versus myself, I recommend that we shift the tax burden away from the working class or lower wage earners and transfer it to members of the public who are in better positions to afford it.

Before you exclaim, “Lisa, you are crazy! I’m tired of being taxed,” here is what I mean.

Let us assume the Government needs the aggregate amount to run the country. If we reduce collections from one area we will have to earn taxes from another one.

Over time I have suggested that we increase the food basket with zero Customs and GCT-rated items to include, for example, breakfast cereals, hot cereals, instant coffee, black tea, green tea, orange juice, apple juice, still bottled water, fresh juice, biscuits, cheese, diapers for infants and adults, toothpaste, toothbrushes, detergents, bath soap, and deodorant.

Given that Customs duty revenues account for only 7 per cent of the total tax collection, we could afford to eliminate this on the basic items and perhaps transfer it to the SCT on imported luxury food items such as grapes, yogurt, wines, and beverages, or increase the rate where it already exists.

I am convinced there is a better way to reduce the cost of living for our minimum wage earners. If we can’t pay them more, then let us reduce the cost of taxes on the products they consume. If we reduce the financial stress and hustle in their lives, undoubtedly, they could plan better for their future. Ultimately it would redound to Jamaica’s best interest, as we will end up with a more productive workforce and a healthier and happier society.

Lisa Hanna is Member of Parliament for St Ann South Eastern, People’s National Party spokesperson on foreign affairs and foreign trade, and a former Cabinet member.

Lisa Hanna