Public Submissions to the Tax Reform

The government of Jamaica has invited the public to submit recommendations about the proposed changes to the current tax system. As suggested in my previous writing this is a crucial part of tax reform and one that must be handled well.  Just as the government must manage the process well so must those who are submitting proposals.

The first thing to remember is the objectives that are to be obtained that is simplicity, equity and increased compliance whilst meeting the government’s revenue needs.  These are goals to which I will refer constantly and one must remember that a balance has to be found.  Something may be simple but may not be equitable or something could be equitable but will not result in increased compliance.  All submissions therefore should strive to meet the desired objectives and not just seek to enhance one’s personal interests.  Many sectors want changes that will reduce their taxes but often do not consider from where the taxes will come.

One must be careful not to pull out one item from the proposals and to focus on that item alone but instead should look at all the proposals together.  For example the recent cry by the agricultural sector about the proposed reduction in the taxes on imported agricultural produce.  The concern raised is not really about taxes but is really focused on the issue of dumping.  The sector is concerned about how the local community can compete against those who are selling products at prices lower than production cost.  The first item to consider is whether this same reduction will reduce your cost of production.  For example will feed prices be reduced, will fertilizers prices come down or will the price of equipment be reduced?  A reduction in the cost of production will help the sector to compete with other countries.

The second point to consider is that there may be other mechanism that can be used to resolve the situation.  There is legislation available that deals with the area of dumping and which can allow the minister to increase the duties on one specific item as opposed to keeping it high on every item.  In addition there is also recourse to the international trade bodies such as the World Trade Organization (WTO) to deal with this issue.

All submissions should be put in writing and should be detailed as to the specific problems with the proposals and should also offer viable alternatives.  Justification should be provided as to the benefit and cost of any changes recommended.  In addition the alternatives should identify from where the revenue will come to replace that which is given up.

Above all we must recognise that as much as we all hate paying taxes, these taxes are necessary to provide essential services.  The goal is not to eliminate taxes but to provide a system whereby each person/organization pays their fair share.