Editorial: TAJ: four-penny wise ...
Ainsley Powell, the commissioner general of Tax Administration Jamaica, is, it seems, a diligent man - an admirable trait in a tax collector. His credo, we can attest, is never to let a penny - or four - go a-begging. At least, when it comes to firms that pay their taxes.
So, in the middle of March, as the Government scrambled for every last penny to make up the J$121.2 billion required to meet the primary surplus target under its agreement with the International Monetary Fund (IMF), Mr Powell assessed, or caused to be assessed, one company "for an additional amount of tax amounting to $0.04" - that is four Jamaican cents - to which he applied a penalty of J$10,000.
The basis of that action is that Mr Powell's tax sleuths unearthed that the company had underpaid by four cents in its December 2014 general consumption tax (GCT) filing "due to incorrect calculations therein". The GCT law gave him power to apply the penalty.
Mr Powell, or persons acting on his authority, didn't enforce an interest charge, which he could, but warned: "Any additional tax created by this adjustment that is unpaid will be subject to penalty of 10 per cent on the balance of any unpaid tax and interest of 1.5 per cent per month, or part thereof, is chargeable on any tax, penalty or surcharge until the date of payment."
We won't claim to have untangled that statement for its precise meaning, but it sounds ominous. The taxpayer, though, had an option to write to Mr Powell to object to the assessment and, presumably, as the TAJ would probably put it, seek a hearing thereon.
For us who consistently argue the need to widen the tax net, and as tongue-burned as our cheeks may become, it is far from us to criticise the TAJ. Although, we wonder what the outcome would be if the TAJ applied, with a bit of creativity, this kind of diligence to other areas of tax collection.
In the last fiscal year, the Government collected J$384.28 billion in taxes. This was $16.17 billion, or 3.8 per cent, below its target. Looked at another way, the Government collected more than 96 per cent of what it said it would. Not, on the face of it, bad going.
MASSIVE TAX-FREE ZONE
But there is much more that can be easily collected. The anecdotal evidence, for instance, suggests that downtown Kingston, where billions of dollars of commerce take place annually, is a massive tax-free zone - or nearly so. Business is conducted informally, and mostly in cash. Businesses and their operators seem to metamorphose overnight, particularly at any hint that they might be on the radar of the tax authorities.
Difficult it may be, but it can't be beyond the capacity of the TAJ, Mr Powell and his four-penny-counting hounds to corner and catch more of these and other tax evaders - especially if they better rationalise their time.
Part of the Government's strategy to counter problems like those faced downtown was to impose a J$1-million limit on cash transactions. That seems not to be working. The Government might try the bank transaction tax, which it previously botched.
By the way, Mr Powell's GCT assessment notwithstanding, the Government missed its primary surplus target by J$4 billion.