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Audley Shaw, the Grinch, has decided to impose new taxes on spirits, liquors and tobacco products despite promising not to do so until the end of the International Monetary Fund (IMF) agreement, claiming that the tax scale in this area was iniquitous.
What is strange, however, is that this same finance minister had searched for everything to tax one year ago, to the extent that he applied general consumption tax (GCT) to salt, sanitary napkins and coffins. Then Shaw saddled Jamaica with a massive tax package just before Christmas and, without wide-scale outrage, he would not have backtracked.
Fast-forward one year. The Government is in need of funds to run the country as its revenue targets are underperforming. Shaw, in dealing with this matter, has used the easiest fiscal tool available to him by attacking the most defenseless areas. He applied sin taxes.
Although there has not been great disquiet in the society about Shaw's latest swing of his tax axe, The Gavel is most upset that he has chosen to apply new taxes when there are billions of dollars owing to the Government, and he has done little to facilitate its collection.
One week after Commissioner of Customs Danville Walker complained that his department is not able to operate efficiently because of a lack of government support, the director general of the Tax Administration Department (TAD), Viralee Latibeaudiere, made a similar complaint, claiming attempts by her department to collect revenue are being undermined by the State's refusal to provide it with the requisite tools.
Walker said Customs asked for $3.2 billion to do its work this fiscal year and it was only granted $2.4 billion. He said his department requires $224.8 million to buy capital goods, but was only provided with $58 million. At the same time, Latibeaudiere has told Parliament's Public Accounts and Appropriations Committee that the lack of resources has put her department "under severe stress'. She told the committee that no money was provided in the last budget for the purchase of computers or other equipment, or to pay additional cashiers to collect revenue on behalf of the State. She also said the agency was not given enough money to do repairs to its computer system, so there is "a compromise".
Shaw, in his contribution to the 2010 Budget Debate, said tax collection was a major priority of the Government. In his usual flamboyant style, he said the Government would be going after tax cheats and served noticed that delinquent persons would be found, and the State's revenue would be squeezed out of their pockets. It was an approach that we support and we are anxious to see it given greater support, because we believe it is unfair for taxpayers, particularly those on pay as you earn (PAYE), to carry the burden of others, many of whom consume more government service without paying their fair share.
Sure, there have been cases of celebrated entertainers and big businessmen being stripped of their properties because of their refusal to pay their taxes but, from what Latibeaudiere has said, we believe the tax administration is just scratching the surface.
Instead of giving the agencies the tools to collect the outstanding monies Shaw, with the IMF by his side, has gone after other tax sources. Let us note that, at the end of October, revenue and grants collection is behind by $3.7 billion. Interestingly, the shortfall from PAYE collection is identical to the shortfall in revenue and grants. Local GCT collection is up $1 billion, which suggests the Government is collecting those monies which are due on the purchase of most goods and services.
We are of the view that the decline in PAYE contribution is not only linked to joblessness but companies refusing to hand over these statutory payments to the Government. Similarly, the decision to force compliant taxpayers, being asked to pay $500 million to the Jamaica Public Service, because property taxes have underperformed, is an indictment on the minister because, with all the talk about focusing on increased compliance, he did not sufficiently empower the tax administration department to track down cheats.
Find tax cheats
And it is not just in the area of property tax. There are lawyers, doctors, journalists, sportsmen, transport operators, vendors, farmers, entertainers and a whole host of self-employed persons who are refusing to pay their own share of income tax. The tax man is yearning to go after them, but he has little resources to track down these cheats or to collect from them. Shaw promised a flat tax for some of these people in April and we have seen nothing of it.
And while the Grinch rolls out new taxes, the Banking Act continues to be a hindrance to the tax administration assessing persons' taxable income, and Shaw has made no efforts at reform in this area. It seems to us that the minister enjoys easy work; he appears unwilling to sweat to clean up an iniquitous tax system and thus, along with the IMF, he goes the easy route of targeting alcohol and tobacco. And the reason for this is clear - the outrage would not be a great as when he attacked salt and napkins, because alcohol and tobacco are sins punishable by high taxation. But, perhaps it is Shaw's way of saying Merry Christmas to the tax-compliant man who consumes the products of his latest attack.
Send feedback to thegavel@gleanerjm.com
What is strange, however, is that this same finance minister had searched for everything to tax one year ago, to the extent that he applied general consumption tax (GCT) to salt, sanitary napkins and coffins. Then Shaw saddled Jamaica with a massive tax package just before Christmas and, without wide-scale outrage, he would not have backtracked.
Fast-forward one year. The Government is in need of funds to run the country as its revenue targets are underperforming. Shaw, in dealing with this matter, has used the easiest fiscal tool available to him by attacking the most defenseless areas. He applied sin taxes.
Although there has not been great disquiet in the society about Shaw's latest swing of his tax axe, The Gavel is most upset that he has chosen to apply new taxes when there are billions of dollars owing to the Government, and he has done little to facilitate its collection.
One week after Commissioner of Customs Danville Walker complained that his department is not able to operate efficiently because of a lack of government support, the director general of the Tax Administration Department (TAD), Viralee Latibeaudiere, made a similar complaint, claiming attempts by her department to collect revenue are being undermined by the State's refusal to provide it with the requisite tools.
Walker said Customs asked for $3.2 billion to do its work this fiscal year and it was only granted $2.4 billion. He said his department requires $224.8 million to buy capital goods, but was only provided with $58 million. At the same time, Latibeaudiere has told Parliament's Public Accounts and Appropriations Committee that the lack of resources has put her department "under severe stress'. She told the committee that no money was provided in the last budget for the purchase of computers or other equipment, or to pay additional cashiers to collect revenue on behalf of the State. She also said the agency was not given enough money to do repairs to its computer system, so there is "a compromise".
Shaw, in his contribution to the 2010 Budget Debate, said tax collection was a major priority of the Government. In his usual flamboyant style, he said the Government would be going after tax cheats and served noticed that delinquent persons would be found, and the State's revenue would be squeezed out of their pockets. It was an approach that we support and we are anxious to see it given greater support, because we believe it is unfair for taxpayers, particularly those on pay as you earn (PAYE), to carry the burden of others, many of whom consume more government service without paying their fair share.
Sure, there have been cases of celebrated entertainers and big businessmen being stripped of their properties because of their refusal to pay their taxes but, from what Latibeaudiere has said, we believe the tax administration is just scratching the surface.
Instead of giving the agencies the tools to collect the outstanding monies Shaw, with the IMF by his side, has gone after other tax sources. Let us note that, at the end of October, revenue and grants collection is behind by $3.7 billion. Interestingly, the shortfall from PAYE collection is identical to the shortfall in revenue and grants. Local GCT collection is up $1 billion, which suggests the Government is collecting those monies which are due on the purchase of most goods and services.
We are of the view that the decline in PAYE contribution is not only linked to joblessness but companies refusing to hand over these statutory payments to the Government. Similarly, the decision to force compliant taxpayers, being asked to pay $500 million to the Jamaica Public Service, because property taxes have underperformed, is an indictment on the minister because, with all the talk about focusing on increased compliance, he did not sufficiently empower the tax administration department to track down cheats.
Find tax cheats
And it is not just in the area of property tax. There are lawyers, doctors, journalists, sportsmen, transport operators, vendors, farmers, entertainers and a whole host of self-employed persons who are refusing to pay their own share of income tax. The tax man is yearning to go after them, but he has little resources to track down these cheats or to collect from them. Shaw promised a flat tax for some of these people in April and we have seen nothing of it.
And while the Grinch rolls out new taxes, the Banking Act continues to be a hindrance to the tax administration assessing persons' taxable income, and Shaw has made no efforts at reform in this area. It seems to us that the minister enjoys easy work; he appears unwilling to sweat to clean up an iniquitous tax system and thus, along with the IMF, he goes the easy route of targeting alcohol and tobacco. And the reason for this is clear - the outrage would not be a great as when he attacked salt and napkins, because alcohol and tobacco are sins punishable by high taxation. But, perhaps it is Shaw's way of saying Merry Christmas to the tax-compliant man who consumes the products of his latest attack.
Send feedback to thegavel@gleanerjm.com