Tax compliance is not harassment says Dr Peter Phillips
Finance Minister Dr Peter Phillips has hit back at suggestions from Opposition Leader Andrew Holness that an increase in tax compliance would mean harassment of businesses.
Holness made the suggestion as he contributed to the Budget Debate last Thursday, but speaking at a meeting at The Gleaner's North Street offices a day later, Phillips said insisting that people and entities pay their share of taxes does not amount to harassment.
"There has been a feature of our civic culture which basically says that only the poor must pay taxes. I hear a man say in the parliament, 'don't harass'. If a man is liable to pay 10 and he pays two, he must be held to account for the eight," Phillips said.
"Don't tell me that because him report two, it somehow eliminates him from consideration for the rest of it, because in the end, the people that don't have any lobbyist to say give them tax-free benefits and give them this and that is just the ordinary Jamaicans out there, and it give rise to a tremendous sense of injustice in the way society is organised," the minister added.
Target up $4 billion
The Government is targeting $12.4 billion in tax revenues, through compliance measures, in the 2015/2016 Budget, up from $8 billion the year before.
The minister said amendments to the Property Tax Act, new transfer and withholding tax legislation would help drive the compliance efforts.
"We have developed the transfer pricing legislation - amendments to the income tax act - with the assistance of the Organisation for Economic Cooperation and Development and that will provide for the particular procedures to be used for transfer prices," the minister said.
"Transfer prices, simply put, are the prices that corporations use in terms of their internal cross-border transactions. A firm operating in Jamaica said it got advertising services or it purchased management services from its parent company of $10 billion, when, if you were to do it with a third party company, the same thing would cost you says $2 billion. What that means is what they would have done is to transfer profits out without taxation and book it as an expense. We have suffered a lot from it," the minister said.
In relation to withholding taxes on payments statutorily due, Phillips said with global bonds, what has been happening is that many financial houses have operated in that they pay the interest and leave it to the taxpayer to make the returns.
"All we are saying is that you withhold it and we will collect it. The taxpayer can report if he wants," the minister said.