Fri | Sep 21, 2018

Widening the tax net a must

Published:Thursday | June 25, 2015 | 12:00 AM


Ignoring a problem will not make it go away. Jamaica will not prosper if it continues to do business as usual. Without significant growth, the country will never emerge from the high debt burden. We will not get there overnight, but we have to make a start.

One important way to increase business in this country is to reduce taxes and interest rates. Anything short of that will not work. The Government seems to be fixated on pressuring the few businesses that are tax compliant instead of widening the tax net. This reasoning is analogous to a shopkeeper trying to make more profit by increasing the price of an item rather than trying to sell more at a reduced price. The former would result in the shopkeeper making less profit as the item would become less attractive. This is essentially the scenario that we are now facing in the country. We have less businesses because the taxes are too high. This is not sustainable. More businesses with lower taxes will result in more revenue as opposed to less businesses with higher taxes. This is not rocket science.


It is the small and medium-size enterprises (SMEs) that are going to grow the country out of its debt. However, they are the ones that are most vulnerable to the high taxes and interest rates. To make a significant impact, the current SMEs have to at least double their capacity. This is impossible in the current economic climate. As a result, we continue to see nominal growth instead of real growth each year.

I think we have been ignoring this chronic problem in the economy for far too long and hoping that it will correct itself simply by ignoring it. This will not happen. We need to make that first step and start addressing the problem so that we all can look forward to the future with some level of hope.

Andrew Gray

Gray's Pepper