Wed | Jun 7, 2023

Get cracking on innovative tax reform

Published:Monday | January 23, 2012 | 12:00 AM

Whether or not Jamaicans are fully aware of the magnitude of our financial dilemma, it is upon us. Far more powerful, more established, more industrious and more productive countries are over their heads in debt.

Confining our ideas for recovery to inside the proverbial box will not suffice. I was, therefore, heartened when the newly appointed minister of education, Ronnie Thwaites, made known some innovative ways to improve our education system.

One essential but painful component of financial recovery is the need for increased revenue through taxes.

Even before this current global economic meltdown, our tax system was in dire need of reform. In general, there is an adversarial relationship between the general public and the revenue department. Taxpayers feel the level of corruption that exists in Jamaica siphons off the hard-earned money they pay to the Government into the pockets of corrupt politicians, public servants/officials and their partners in crime.

Revenue wastage

There is also the concern of significant revenue wastage with the unnecessary refurbishing of government offices, little or no conservation of utilities in government-occupied offices, dead-end projects, white elephants, irrelevant investigations and the hiring of too many 'consultants' (even though tax dollars already educate many civil servants to do exactly what many consultants do). Whenever 'the Government' pays for something, taxpayers know full well that it is they who are, oftentimes unwillingly, footing the bill.

Then there are instances of specific taxes that fail to produce results. The education tax is absorbed by the Consolidated Fund and the double and compounded fuel taxes that were supposed to help to repair the roads have yet to do so. Many roads, especially in residential areas, are so deplorable that they cause repeated costly repairs to our vehicles and predispose us to accidents.

The tax system is onerous and unfriendly. There are numerous deductions, and the system targets the same groups of individuals repeatedly. Attempts at tax compliance are rewarded with recurrent calls, suspicion and sometimes harassment.

If the tax department owes you a refund, you are severely and swiftly penalised for trying to claim it. You will be audited by agents going through your accounts with a fine-tooth comb before any payment is made.

Governments formed by both major political parties have traditionally assumed that casual workers, tradesmen and even artisans only earn sporadically and never enough to pay any income taxes. Widening the tax net never includes this group of citizens. Obviously, the general consumption tax is designed to get taxes from them and others.

Sense of participation

I would like to proffer that workers in those categories be registered for identification, tracking and even just for the trickle of income that registration and some modicum of tax returns will bring. Paying even a small amount of income tax will endow them with a sense of participation in, or contribution to, our country.

I also wonder if the Government would consider setting up tightly regulated, capped, tax-deductible funds for specific needy institutions like certain schools, hospitals, hospices, places of safety, children's homes, and so on.

I feel confident that businesses and individuals will be inclined to voluntarily contribute directly to institutions of their choice and have a percentage of their submissions written off as taxes paid. This would increase overall compliance and revenue while reducing the need for the Government to fully fund all the institutions under its care.

I am certain that there are many innovative ways of increasing tax revenues instead of rehashing, tweaking and retooling the same old methods over and over again. Necessity is the mother of invention, and we are certainly in need of inventive ways to rescue our economy.

Garth A. Rattray is a medical doctor with a family practice. Email feedback to columns@gleanerjm.com and garthrattray@gmail.com.