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Tax noose tightens for delinquents

Published:Friday | April 9, 2010 | 12:00 AM
Finance Minister Audley Shaw making his presentation in Parliament yesterday. - Norman Grindley/Chief Photographer

Daraine Luton, Senior Staff Reporter

TAX-PAYING Jamaicans have been spared the pain of a levy package this year as Finance Minister Audley Shaw kept his promise of no new taxes.

Instead, Shaw has launched a far-reaching tax net, targeting professional groups such as lawyers and doctors, and artisans such as masons who the minister says are not paying their fair share of taxes. Even taxi operators will be targeted.

"Our goal is to stamp out this pervasive culture of tax evasion which has as its motto, 'catch me if you can'. Our response, resonant with steely determination will be, 'Yes, we can'," the finance minister told Parliament yesterday.

Last year, Shaw heaped a mammoth $47.6 billion in tax packages on the backs of Jamaicans even as he lamented that too many persons who should be paying taxes were evading them.

In opening the Budget Debate in Parliament yesterday, the finance minister said Cabinet was now considering several proposals to plug the leakage of billions of dollars in tax revenue because of tax avoidance.

Flat tax

He said that one such proposal was to implement a flat tax for operators in certain fields, which would allow the Government to collect a set amount in income tax from persons such as plumbers, electricians, masons, painters and transport operators.

"The mechanics of how this will be applied, as well as how it will be collected, and the legislative provisions, will be worked out by the tax authorities," the finance minister told Parliament.

Shaw also announced that professional groups such as lawyers, doctors and architects would soon be required to include signing up for a tax-compliance certificate as part of the registration requirement to practise.

"We are going to bring in everybody. Equity and fairness in the tax system is all we are asking for," Shaw said as he buttressed the proposal.

But Shaw's ambitious compliance programme goes beyond raking in more income tax. Yesterday, he signalled that it would no longer be business as usual in relation to the remitting of general consumption tax (GCT) to the national coffers.

Shaw said that Cabinet had signed off on a set of proposals to strengthen tax compliance with regard to this consumption tax.

Penalties hiked

Among the measures approved, Cabinet is to move the penalty from $5,000 to $100,000 for individuals and from $10,000 to $100,000 for corporate bodies which fail to apply for registration.

The penalty for failing to file GCT returns is to move from $1,000 to $10,000 for an individual and $2,000 to $10,000 for a company.

Cabinet is also proposing that failure to display a GCT Certificate of Registration, which currently does not attract any penalty, carry a fine of $50,000 or three months' imprisonment.

Similarly, the failure to make tax returns could also carry major sanctions with Cabinet proposing that persons be jailed for up to 12 months or a fine of $500,000.

Shaw has announced that interest charged for late payments of GCT is to be reduced from 2.5 per cent to 1.5 per cent to encourage persons to pay outstanding amounts owed to the Government.

Already, the Government has announced that the interest on late payments of income tax will be reduced from 40 per cent to 20 per cent.

"We need to stop paying lip service to combating the scourge of tax evasion," Shaw told Parliament, as he promised to tighten laws and increase penalties, including custodial sentences, in the fight against tax cheats.

Government intends to finance its $503 billion through revenues and grants of $326.3 billion, $287.2 billion of which will come from taxes, and $176.3 billion in loans from the domestic market. The borrowing to plug the 6.5 per cent Budget deficit represents a sharp decline from the $301.5 billion borrowed last year.