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Steven Jackson, Business Reporter
The island's tax administrators yesterday all but rejected a Paying Taxes 2012 report published by global accounting firm PricewaterhouseCoopers (PwC), for what it described as the company's failure to account for new measures that contributed to slashing red tape at collection points.
The recently published study, undertaken by PwC, the World Bank and the International Finance Corporation (IFC), identified Jamaica as the 11th worst in terms of the ease of paying taxes in the world.
The ranking was based primarily on the number of payments required to be made by companies and individuals, the number of hours spent to pay, as well as total tax rates.
However, director of communication at Tax Administration Jamaica (TAJ), Meris Haughton, told Wednesday Business that "the study was based on 2010 data" and has not incorporated new measures implemented this year to reduce the bureaucracy associated with collections.
Her response was based on TAJ's latest statistics and analysis of the findings of the PwC/World Bank/IFC report. Haughton argued that if PwC took into consideration new measures introduced by the department it would have likely rocketed the island's ranking from among the world's worst in terms of the ease of collection to one ranked among the best in the Caribbean.
According to Haughton, the island has, since January this year, reduced the number of tax payments per year from 72 in 2010 to 36 currently. In addition, she said, the number of hours companies and individuals have spent paying and filing their taxes has decreased from 414 to its current level of 199, she said. A main driver for the decline in payments is related to payroll reform, she explained.
"Significant work was done in amalgamating the monthly payroll," Haughton said. "The taxes related to National Housing Trust, HEART and others were consolidated into one payment instead of five," she added, noting that within weeks TAJ will be implementing another set of measures to further reduce the number of payments.
"We really did a lot of work and the business community has really appreciated this," she said.
The report's chapter on Jamaica, written by chartered accountant Eric Crawford who is based at PwC Jamaica, was subtitled: "Inadequate tax collections despite relatively high tax rates - resolving the dilemma". Crawford described the level of taxation as relatively high based on the rate of personal income tax at 25 per cent and general consumption tax at 17.5 per cent.
"At these levels, the burden on taxpayers cannot be said to be light," he said. He admitted, however, that "at 23 per cent, tax as a percentage of GDP is lower than what prevails in most other jurisdictions in the region".
Crawford recommended a number of initiatives geared towards improving tax compliance, including widening the tax net and the reconsideration of special tax waivers for projects which generate wealth.
"Furthermore, there is an inordinately high incidence of 'discretionary waivers', meaning that the government waives tax that is legally due. It will not be easy to address this latter issue, given that individual taxpayers who benefit from various exemptions will fight to retain their positions of privilege," he said.
Paying Taxes 2012 is a unique study from PwC, the World Bank and the IFC, which measures the ease of paying taxes across 183 economies worldwide. It records the taxes and mandatory contributions that a medium-sized company must pay in a given year as well as measuring the administrative burden of paying taxes and contributions.
The report said that this year the rankings differ from those used by the World Bank Group in the Doing Business 2012 report where a change in the ranking methodology is being piloted to address various issues that have been raised through discussions with stakeholders.
steven.jackson@gleanerjm.com
The island's tax administrators yesterday all but rejected a Paying Taxes 2012 report published by global accounting firm PricewaterhouseCoopers (PwC), for what it described as the company's failure to account for new measures that contributed to slashing red tape at collection points.
The recently published study, undertaken by PwC, the World Bank and the International Finance Corporation (IFC), identified Jamaica as the 11th worst in terms of the ease of paying taxes in the world.
The ranking was based primarily on the number of payments required to be made by companies and individuals, the number of hours spent to pay, as well as total tax rates.
However, director of communication at Tax Administration Jamaica (TAJ), Meris Haughton, told Wednesday Business that "the study was based on 2010 data" and has not incorporated new measures implemented this year to reduce the bureaucracy associated with collections.
Her response was based on TAJ's latest statistics and analysis of the findings of the PwC/World Bank/IFC report. Haughton argued that if PwC took into consideration new measures introduced by the department it would have likely rocketed the island's ranking from among the world's worst in terms of the ease of collection to one ranked among the best in the Caribbean.
According to Haughton, the island has, since January this year, reduced the number of tax payments per year from 72 in 2010 to 36 currently. In addition, she said, the number of hours companies and individuals have spent paying and filing their taxes has decreased from 414 to its current level of 199, she said. A main driver for the decline in payments is related to payroll reform, she explained.
"Significant work was done in amalgamating the monthly payroll," Haughton said. "The taxes related to National Housing Trust, HEART and others were consolidated into one payment instead of five," she added, noting that within weeks TAJ will be implementing another set of measures to further reduce the number of payments.
"We really did a lot of work and the business community has really appreciated this," she said.
The report's chapter on Jamaica, written by chartered accountant Eric Crawford who is based at PwC Jamaica, was subtitled: "Inadequate tax collections despite relatively high tax rates - resolving the dilemma". Crawford described the level of taxation as relatively high based on the rate of personal income tax at 25 per cent and general consumption tax at 17.5 per cent.
"At these levels, the burden on taxpayers cannot be said to be light," he said. He admitted, however, that "at 23 per cent, tax as a percentage of GDP is lower than what prevails in most other jurisdictions in the region".
Crawford recommended a number of initiatives geared towards improving tax compliance, including widening the tax net and the reconsideration of special tax waivers for projects which generate wealth.
"Furthermore, there is an inordinately high incidence of 'discretionary waivers', meaning that the government waives tax that is legally due. It will not be easy to address this latter issue, given that individual taxpayers who benefit from various exemptions will fight to retain their positions of privilege," he said.
Paying Taxes 2012 is a unique study from PwC, the World Bank and the IFC, which measures the ease of paying taxes across 183 economies worldwide. It records the taxes and mandatory contributions that a medium-sized company must pay in a given year as well as measuring the administrative burden of paying taxes and contributions.
The report said that this year the rankings differ from those used by the World Bank Group in the Doing Business 2012 report where a change in the ranking methodology is being piloted to address various issues that have been raised through discussions with stakeholders.
steven.jackson@gleanerjm.com
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