Thu | Mar 22, 2018

Letter of the Day | Indirect taxation unfair, discriminatory

Published:Monday | February 13, 2017 | 12:00 AM


The imposition of indirect taxes on the population by the Jamaican Government is inhumane and immoral. The backward and crooked rationale for this taxation, according to Finance Minister Audley Shaw and his junior minister, Fayval Williams, is to fill the gap that is being created to fulfil the election promise to increase the tax threshold of the working class up to $1.5 million. That is, to remove income tax from the working class up to earnings of $1.5 million. This promise was initially made on the grounds that there would be no new taxes.

What is indirect taxation? Essentially, these are taxes or fees that are charged on goods and services equally to every member of the population who has to pay for them. It is levied equally on everyone, no matter what their income is or whether they earn an income or not. An example is the seven per cent tax increase on fuel price less than a year ago. This severely impacted the poor and the unemployed. In addition, the increased price of fuel sparked an increase in the price of basic consumer items such as supermarket products which the poor and the unemployed still have to find miraculous ways to buy.

In direct taxation, persons pay taxes based on the ability-to-pay principle. That is, persons are charged taxes based on the amount that they earn. This is equitable and fair.




No matter what you put indirect taxes on or how little it may be, it will cost the poor and the unemployed more to pay for goods and services. It's a clear act of discrimination.

In any economy, indirect taxation will undoubtedly have a devastating effect on the poor and the unemployed if no systems are in place to protect these vulnerable groups. It will undoubtedly push up the crime rate, as these people may not have any other alternative than to turn to criminality for survival.

My recommendation to the Government is to leave the tax threshold alone now! By no means are the people who earn more than $1 million per year the poorest or neediest in the Jamaican society. They can afford to pay a little of fair direct taxes and survive.