EDITORIAL - Allow firms to sell withholding tax receivables

Published: Monday | December 17, 2012 Comments 0

His dawdling over the Tivoli Gardens report makes us sceptical, otherwise we would propose another assignment for Earl Witter, the public defender, whose job includes protecting the constitutional rights of Jamaicans from intrusion by the State.

Among those rights, as noted in Section 15 of the Charter of Fundamental Rights and Freedoms, is the protection of property from arbitrary appropriation by the State.

"No property of any description," the section says, "shall be compulsorily taken possession of and no interest in or right over property of any description shall be compulsorily acquired," except in circumstances where the law sets a transparent principle for compensation and the acquisition can be challenged in court.

We expect that the Simpson Miller administration will disagree with our interpretation of events, but it is the considered view of this newspaper that the Government is, on a massive scale, denying Jamaicans enjoyment, if not outright expropriation, of their property, to wit, withheld but reimbursable interest income.

The tax on interest income, at 25 per cent, is withheld at source. But some people and institutions, such as retirees and pension funds, are exempt from the tax. The tax, therefore, should be reimbursed.

In cases where firms and individuals may be exempt from the tax on interest income, withheld amounts can be set off against other forms of taxes that they might owe. The assumption, however, is that surplus amounts will be reimbursed.

But there is a problem. The Jamaican Government is notorious for its tardiness in giving people back their money.

Indeed, it is estimated that the Government owes individuals and firms upwards of J$20 billion in withheld taxes, without any obligation to pay interest or timetable to clear the debt. Baldly, Jamaicans, many of them poor pensioners, are, contrary to the Constitution, denied access to, and enjoyment of, their property.

Indeed, this is a matter in which we expect that Mr Witter would have an abiding interest and in which, in other circumstances, we might be robust in encouraging him to become engaged. The problem here is that it is more than two and a half years since the intervention by the security forces into Tivoli Gardens to face down gunmen. More than 70 people died, many in disputed circumstances.

have legislators failed us?

Mr Witter is yet to deliver his promised report on the matter. The public defender may still want to make the withholding tax issue a matter of investigation.

But whatever the stance of Mr Witter, this newspaper invites the legislators and the Government to consider whether their conduct on this issue is moral and acceptable.

The administration, we feel, should be transparent about the debt and outline a path and timetable for clearing the debt, with an undertaking to pay interest at market rates.

Further, we also propose that in circumstances where the Government holds withheld interest on income taxes for firms and these firms have no obligations against which they can be offset, that firms be allowed to sell the receivables to third parties. They will have to discount receivables, but in many cases it will be a boon to the cash and the difference between a firm's survival or collapse. And it will, for some, be a relief just to escape the clutches of the Government.

The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.

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