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PRIVATE sector leaders suggest that Jamaica could realise significant growth if Government lures illegitimate businesspersons into the tax net. "Jamaica has been able to stay alive because more than 50 per cent of our economy is underground — more than 50 per cent not only imports, but also exports," said Gassan Azan, CEO of the MegaMart chain of superstores.
"When you have less than half of the economy trying to pay taxes based on revenue generated to support the entire economy, at some stage you are going to crash," warned the businessman.
Azan was speaking during a breakfast meeting hosted by Observer chairman Gordon 'Butch' Stewart at the newspaper's head office in Kingston on Friday.
A study commissioned by the Government in 2002 concluded that the equivalent of 43 per cent of Jamaica's gross domestic product (GDP) was informal and therefore escaped the regulatory purview of the authorities. The International Monetary Fund (IMF) in 2006 estimated the annual growth of the Jamaican economy at up to three percentage points above the Statistical Institute of Jamaica estimate due, the fund said, to the unmeasured activities in the informal sector. Noting at the time that the country's informal sector was growing faster than the formal sector, the IMF contended that the rapid growth in the underground economy was counter to sustainable economic development.
Azan believes that the informal economy now represents as much as an alarming 60 per cent of GDP, and chided successive governments for not doing enough to fix the problem.
"The easiest way to show growth is to get five per cent of the underground economy into the formal sector — overnight you will show phenomenal growth," Azan argued.
"No government has ever been willing to take this on and this is part of our social nightmare. You have an undecuated population, who can't get jobs in the formal sector, who end up hustling in some form or fashion, earning their keep and not contributing to the betterment of Jamaica, and no government on either side has been willing to bell that cat," he said.
For example, Azan noted that in most other countries of the world, a street vendor has to be registered and have identification, while in Jamaica they largely operate without any licence.
"It is totally out of control what government has allowed to happen. Yet the authorities are in our places checking the same things over and over, which we are all in compliance with, but they are not checking what is out there," he complained.
Businesswoman Audrey Hinchcliffe agreed with Azan that Government hounds private sector companies for taxes while illegitimate players are allowed to operate freely. She said the industry in which her business operates, for instance, is notorious for tax dodgers.
"The tax man pays no attention to the underground industry," said Hichcliffe, who is the principal of Manpower and Maintenance Services.
She noted: "The amount of janitorial companies that are in car trunks far exceed what is out there that the tax man can go after."
Stewart noted that there seems to be a big focus on collecting taxes from just a "few organisations" that do particularly well.
"The minute someone goes into business and starts doing well, two things happen: the bad mouth takes place and the Government starts sending people in for tax," Stewart outlined, before urging Government to work hard to increase the tax net.
Read more: http://www.jamaicaobserver.com/busin...#ixzz1hBHTtoVW
"When you have less than half of the economy trying to pay taxes based on revenue generated to support the entire economy, at some stage you are going to crash," warned the businessman.
Azan was speaking during a breakfast meeting hosted by Observer chairman Gordon 'Butch' Stewart at the newspaper's head office in Kingston on Friday.
A study commissioned by the Government in 2002 concluded that the equivalent of 43 per cent of Jamaica's gross domestic product (GDP) was informal and therefore escaped the regulatory purview of the authorities. The International Monetary Fund (IMF) in 2006 estimated the annual growth of the Jamaican economy at up to three percentage points above the Statistical Institute of Jamaica estimate due, the fund said, to the unmeasured activities in the informal sector. Noting at the time that the country's informal sector was growing faster than the formal sector, the IMF contended that the rapid growth in the underground economy was counter to sustainable economic development.
Azan believes that the informal economy now represents as much as an alarming 60 per cent of GDP, and chided successive governments for not doing enough to fix the problem.
"The easiest way to show growth is to get five per cent of the underground economy into the formal sector — overnight you will show phenomenal growth," Azan argued.
"No government has ever been willing to take this on and this is part of our social nightmare. You have an undecuated population, who can't get jobs in the formal sector, who end up hustling in some form or fashion, earning their keep and not contributing to the betterment of Jamaica, and no government on either side has been willing to bell that cat," he said.
For example, Azan noted that in most other countries of the world, a street vendor has to be registered and have identification, while in Jamaica they largely operate without any licence.
"It is totally out of control what government has allowed to happen. Yet the authorities are in our places checking the same things over and over, which we are all in compliance with, but they are not checking what is out there," he complained.
Businesswoman Audrey Hinchcliffe agreed with Azan that Government hounds private sector companies for taxes while illegitimate players are allowed to operate freely. She said the industry in which her business operates, for instance, is notorious for tax dodgers.
"The tax man pays no attention to the underground industry," said Hichcliffe, who is the principal of Manpower and Maintenance Services.
She noted: "The amount of janitorial companies that are in car trunks far exceed what is out there that the tax man can go after."
Stewart noted that there seems to be a big focus on collecting taxes from just a "few organisations" that do particularly well.
"The minute someone goes into business and starts doing well, two things happen: the bad mouth takes place and the Government starts sending people in for tax," Stewart outlined, before urging Government to work hard to increase the tax net.
Read more: http://www.jamaicaobserver.com/busin...#ixzz1hBHTtoVW
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