Rein in corporate tax dodgers
THE EDITOR, Sir:
Below is an open letter to Minister of Finance and Planning Dr Peter Phillips.
I write in relation to your statement in Parliament that 27 per cent of entities with over $1 billion in sales per annum are not filing tax returns and that 21 per cent are not paying corporate income tax. All Jamaica shares your concern that "we find ourselves drowning in a tide of non-compliance and delinquency". Hence, I am asking the question on the minds of many - what is being done to remedy this unacceptable situation?
The steps to be taken become even more urgent given the following context:
1 Tens of thousands of PAYE taxpayers are obligated to contribute approximately 31 cents out of each dollar to the national coffers. In fact PAYE revenue is, according to the latest Ministry of Finance data published on July 31, running ahead of budget despite the burden on most of these Jamaicans.
2 At the same time, corporate tax payments are running $2.4 billion behind budget.
3 Shortfalls in public revenue and the requirements of the IMF agreement are consequently compelling Government to cut back budgeted expenditure by $6.2 billion in the first three months of the 2014/15 financial year, thereby impacting provision of services vital to the public as well as increasing pressure to borrow or to utilise funds which might have otherwise been assigned to make up the shortfall.
4 Revenue shortfalls may also be contributing to limits on government subsidies to essential services and to public entities, thereby encouraging increases in fees and charges to the public. This limitation no doubt influenced recent increases in fares charged by the JUTC even though strict accountability should have required the company to indicate what measures had been taken to deal with the very serious weaknesses in management and operations identified by the auditor general prior to such fare increases being agreed.
5 The level of income inequality in Jamaica has recently become among the highest in the hemisphere (IMF Regional Economic Outlook, May 2013) and therefore, for this additional reason, non-compliance and tax evasion by the very wealthy need to be dealt with seriously.
Because I believe you are well aware of this context, Minister, in the interest of equity, accountability and transparency, I am asking that you institute measures necessary to correct this unjust situation and indicate to the public what steps are now being taken in this regard.
Trevor Munroe (Prof)
National Integrity Action