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Don't colt the game - Government must ensure tax committee is not left impotent

Published:Monday | January 13, 2014 | 12:00 AM
Minister of Finance, Peter Phillips (left), shares a joke with Jan Kees Martijn (second left), mission chief, International Monetary Fund; Dr Bert Van Selmsecond (third left), senior resident representative, IMF; Colin Bullock (right), director general, Planning Institute of Jamaica, during a press conference to update the first quarter test. - File

IT APPEARS the Government is again lining up to avoid going before the Committee on Tax Measures before implementing new taxes, which, if it happens, will be a major disrespect to the people of the country.

In its request for modification of performance criteria under the four-year Extended Fund Facility with the International Monetary Fund (IMF), the Government has made it clear that it is contemplating new taxes for the new financial year.

The Government has said a study will be conducted by March on the scope for imposing GCT on petroleum products.

"Its conclusions will guide possible implementation in fiscal year 2014-15," the IMF has been told.

Quite puzzling, however, is Finance Minister Dr Peter Phillips's bold declaration of no new taxes when the country has indicated to the IMF that a new gas tax is a possibility. "We don't have plans for taxation. We have plans for tax reform, generally, but we will have to maintain our deficit targets," the minister has said.

The Gavel will not get caught up in what we believe is Dr Phillips's double speak on the issue. Instead, we would humbly bring to the attention of the Speaker of the House of Representatives, Michael Peart, the potential for the IMF, aided by the Government, to bypass the tax committee of Parliament.

revised House rules

Under the revised House rules, the Public Administration and Appropriations Committee (PAAC) has been mandated to receive a mid-year report on medium-term economic programmes that must be tabled by the minister of finance. Having received the report from the minister, the PAAC, not later than February 1 each year, must report its findings to the Committee on Tax Measures.

The Committee on Tax Measures is empowered to invite stakeholders to make presentations before it. A report must be sent to the whole House of Representatives by March 1 each year.

The finance minister on Christmas Eve tabled a half-yearly report, and the PAAC now has the task of examining the report.

It is such a pity, however, that the Ministry of Finance left the delivery of the interim report until late December, giving the PAAC just a few weeks to consider its contents.

In the context of Jamaica's medium-term economic programme, the report ought to have been laid by latest November, giving ample time for perusal. In fact, the Parliament, when it considered the Financial Administration and Audit Act regulations, which outline the requirements for the report, agreed in principle to the report being tabled by November.

report deadline

But with the report now tabled, the PAAC is expected to complete its work in time to submit a report to the Committee on Tax Measures no later than February 1.

Now, Dr Peter Phillips has consistently expressed the desire for the Committee on Tax Measures to consider possible taxes to be imposed in the ensuing financial year and send a report to the whole House of Representatives by March 1 each year.

However, it seems someone is intent on colting the game. Both the letter to the IMF and the fiscal policy paper tabled in Parliament have spoken to the intention of a study to determine the scope for imposing GCT on petroleum products. The document to the IMF goes further to say the results of the study "will guide possible implementation in fiscal year 2014/15".

But not only is it the case that such intention has not been disclosed to the Parliament, the fact that the study will be conducted by March automatically shuts the PAAC out of the process of considering the proposal for GCT on fuel.

Further, the Committee on Tax Measures is being left impotent in the matter, since it may not get sufficient time to examine the proposal for more tax on gas.

Let us hope that unlike last year when Phillips bypassed the committee, this year, any proposed tax measure will be referred to the Committee on Tax Measures, and that it be given sufficient time to do its work.

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