My Two Cents » Tax Cheats : A Jamaica Gleaner Blog

Tax Cheats

As the government seeks to meet its budget targets as agreed with the International Monetary Fund, part of that process involves the collection of taxes. Recently we have seen where the tax authorities have swooped down on businesses that are delinquent in paying over taxes. The disturbing thing about these happenings is that the taxes owed date back for several years. Worldwide there is a reluctance to pay tax and ways are sought in which one can avoid tax. Tax avoidance is different from tax evasion; tax avoidance involves claiming any allowances or any expenses that you are entitled to under the law. Tax evasion is simply deciding that you are not going to pay tax and using ways to defraud the system such as under invoicing or not declaring your income.

Unfortunately the trend in Jamaica is for tax evasion and most persons would rather not work than take a job in which they will have to pay tax. This attitude may have arisen as a result of the waste of resources by various governments over the years. However I believe the freeness mentality that many persons have has helped to promote the idea that taxes are not to be paid. The contradiction to this position is that the same people who do not pay taxes want free health, free education, good roads, street lights, etc., all of which are paid for from taxes. There is a disconnect between the payment of taxes and the provision of government services.

Despite the recent progress including the suspension of tax waivers, there is still much that is left to be done by the government. The tax authorities have for many years focused their collection efforts on businesses that are already paying tax and in many cases audit them over and over again. While we do not object to the right of the collectorate to audit businesses, not enough effort has been placed on auditing those individuals and companies who do not make returns. The amount of money to be gained from unregistered taxpayers and those who do not file returns is significantly more than what can be obtained from those who are currently in the tax system.

There is a need to shift more of the work of the tax authorities towards bringing into the system those who are currently operating outside of it. For too long the tax burden has been on the P.A.Y.E. persons and the companies that registered to pay tax. The approach must be to encourage those who pay no tax to know that they will no longer be able to get away from it. After all better tax compliance will lead to lower rates of tax in the future and don’t we all want that?

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5 Responses to “Tax Cheats”

goose says:

August 16, 2010 at 6:32 pm

I didn’t know the IMF wrote articles for the Gleaner.
Sedoni says:

August 17, 2010 at 9:18 am

You are right about the issue of tax cheats being a burden on civic minded Jamaicans who pay their taxes or have no choice because they are PAYE. You have to understand however that the tax authorities have a duty to audit persons who have filed a return to ensure that they pay what is due.

I am sure you are aware that Jamaica has a self-assessment system, the authorities must therefore ensure that what people report is a true reflection of their income and liability status. The tax authorities had reported earlier this year that they were focusing their attention on specific groups, such as professionals, entertainers,etc. Areas where an analysis shows that they are grossly underreporting/not reporting. It was shocking to see the report on doctors for example who in some cases were paying less than a secretary.

Until we recognise that tax cheats come in all shapes, sizes and colours we will not solve this problem. As individuals too I think we need to do more and report these cheats to the tax authorities. Like an MP said earlier this week I am willing to be an informer.
aj says:

August 17, 2010 at 1:44 pm

The irony of the situation with tax cheats is that they curse the government for not providing the roads, the hospital services, the educational infrastucture, and a host of other things that they feel the country should have in place, but they never stop to think that they are the reason that things are not in place because they are forever stealing what the government use to provide these things. In actual fact most Jamaicans steal from themselves because they refuse to obey the laws of the land which include paying you taxes.
Al. Ewen says:

August 17, 2010 at 8:04 pm

Dear editor:

I could not be more happier now that the government (The Tax Department)is now clamping down on all those whoare evading tax. I have long ago discovered that some of the biggest companies for year dis not even register their business.This was brought to my awareness while working with the Prices Commission. What I had discovered could well be trueeven today knowing that the Prices Commission has been(politically)abolished. During my time(32 years,)when prosecutingany of these business people for breach of the Price Control act, they could not be prosecuted by law as their businesses were not registered.Considering now that there is no policing of these aspects of law, I can well imagined howmuch these tax fleecers are getting away with.
I would only hope that the teeth of the tax law will beclosing in on them. Goodness me.

Al.
john wilson says:

August 21, 2010 at 5:35 am

dear sir,i read your statement with interest,and the most glaring fact is the percentage of the top population 90% who do not pay taxes,are doctors,lawyers,accountants, i see you do not include politicians,nor dishonest policemen who supplement their salary with on the spot fines which go in their own pockets,i have a friend who works very hard in her own bar,she has a 16yr old daughter,by the time she pays rent for the bar,her house,food,water,gas,electric,bus fares for school,clothes,she has nothing left,does anyone in their right mind believe that there is any incentive to work in Jamaica,when at the end of each month you are in debt,because the goverment takes everything you have in taxes,and only the top echelon seem to be allowed to pay nothing,led by the accountants,who know all the tricks for the top people to avoid paying,i think this goverment should start too govern,and start at the top,and then maybe everyone else will come into line,there is an old saying,you cant get blood out of a stone,but iam afraid that is what seems to be happening here,the rich get richer,and the poor work their fingers to the bone for nothing.