Where will the taxes come from?

Published: Thursday | May 9, 2013 Comments 0

RECENTLY, A raft of tax measures took effect, and it is important to ascertain whether the targets established by the government will be achieved. Where will the taxes come from?

There is a story in the gospel of Matthew wherein the disciples wanted to ascertain whether they ought to pay taxes (17:24-27). Jesus told the disciples that the King does not tax his children and, therefore, the disciples were freed from tax obligations because of his relationship to them. However, the disciples have a responsibility to serve the community through the paying of taxes. Jesus told Peter to go and catch a fish and he will find money in the mouth of the fish to pay the taxes. This Peter did. However, since such miracles have ceased, we now have to determine where the taxes will come from.

It seems that the pensioners will be hard hit with an almost 100 per cent increase in property taxes. Pensioners should, therefore, access the door that allows them to appeal when they find property taxes to be onerous. Pensioners should be given special treatment. The 'no increase' in taxes on basic food items is a good move, because PATH will not capture everyone, and persons in the middle class give generously and regularly to persons who need basic food plus this route would dry up if basic food items are taxed further.

There are inherent dangers in increasing the gas tax. According to Minister of Transport, Housing and Works Omar Davies, the public transportation system is in danger of collapse because of devaluation of the Jamaican dollar, rising costs and increases in fuel cost. Bear in mind that the increase in fuel cost and inflation is related partly to the gas tax. A fare increase will pressure overburdened Jamaicans, most of whom are facing a wage freeze, or who got increases that were below the inflation rate. Therefore, an increase in gas tax would have undesirable ripple effects throughout the economy.

The minster of finance, Peter Phillips, announced that many taxi operators are now paying a flat tax. Other bigger players need to come on board. Self-employed doctors, lawyers and large income earners need to pay their fair share. The minister of finance needs to meet with these groups to remind them of their civic responsibility. The Oversight Committee, appointed by Phillips and headed by businessman Richard Byles, should encourage high-income earners to pay their fair share.

EASY, PAINLESS METHOD

And it seems to me that another avenue of revenue generation is targeting tourists and members of the diaspora. Obviously, the Government feels that these groups have disposable incomes to spend, hence the proposed introduction of casino gambling. And based on that premise of disposable income, establishing a visa regime would be an easy and painless way to increase our tax revenues.

This is not a unique idea. St Maarten, a Dutch dependency, imposed visa tax on Jamaicans. Similarly, three British dependencies, the Cayman Islands, Turks and Caicos and the British Virgin Islands have the visa tax. The United States, United Kingdom and Canada have made it obligatory for Jamaicans to obtain visas before we can enter their countries. Even Jamaicans who fought as soldiers beside the British in World War II have to get visas to visit Britain. It is possible to charge a net of US$100 for a five-year Jamaican visa. And, since 1.2 million visitors arrive in Jamaica annually, it means that Jamaica could earn US$120 million.

It is unrealistic to expect to garner more taxes, in a declining economy, from ordinary Jamaicans. The Government must cut expenditures or get the taxes from outside, such as a visa tax.

Rev Devon Dick, PhD, is pastor of the Boulevard Baptist Church in St Andrew. Send comments to columns@gleanerjm.com.


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