Mark Kerr-Jarrett | Go after tax-dodging businesses
I would like to take this opportunity to congratulate the Government on its fiscal performance to date and the discipline to adhere to the reform programme started by the previous administration under the supervision of the International Monetary Fund.
I read with relief the proposal by Minister Shaw to reduce Customs duties which, from previous experience, in particular, the new car industry, is only logical because if memory serves me right, the previous Jamaica Labour Party Government (2007-2011) did this, and the net dollar revenue from new car imports increased. Unfortunately, they were later increased and revenue decreased.
This should more than prove that if you want to increase customs revenue, you reduce the rates as the minister said this would, in turn:
- reduce corruption at ports of entry;
- reduce the use of false invoices;
- promote tax compliance;
Furthermore, to name a few, it will:
- increase economic activity;
- put more new cars on the road;
- reduce traffic accidents;
- reduce foreign exchange tied up in diverse automotive parts inventory;
- reduce toxic engine emissions, as new cars burn fuel better;
- improve overall fuel efficiency and reduce oil imports;
- upgrade the condition of the used car market;
- reduce roadside garages, thus environmental pollution, due to illegal disposal of old oil and parts;
- upgrade labour pool as the dealers will factory-train their staff;
- reduce the cost of retooling our industries and getting them efficient and competitive;
- reduce the cost of starting new businesses and the amount of borrowed funds, thus increasing the likelihood of success and driving job creation and tax revenue;
Regarding tax compliance, I would like to forward the following suggestions again:
- Recruit and put under contract private accountants/auditors to work with Tax Administration Jamaica and send them out to audit non-compliant business entities and professionals for income tax, initially.
- Give them a stipend to cover their day-to-day expenses.
- Solely, for every NEW account they bring into the tax net, pay them 50 per cent of the first assessment. Why?
Reduce corruption. The audited will have to pay the auditor at least 50 per cent of the assessment to make him walk away and leave themselves open to being audited again.
The auditor can then afford their own personal security on site as I have been informed that the audited sometimes threaten and intimidate the auditor, who, then, for personal security reasons, abandons the audit.
The Government gets 50 per cent of something it never had, and, more important, the recurrent revenue and compliance with all other tax reporting.
These audits will also help to identify and convict the criminal masterminds and bosses.
If we were to do this and increase tax compliance, I would suggest that we allocate a sizable portion of the new revenue gained specifically to debt reduction, thus reducing our interest payments and other related obligations.
Match this with a leaner, better-paid and more efficient public sector, as called for by the International Monetary Fund, and I believe we would be well on the way to significantly higher levels of economic growth, job creation, and reduced crime.
- Mark N. Kerr-Jarrett (JP) is managing director of Barnett Ltd. Email feedback to email@example.com.