Election Questions on Taxation

One of the objectives set by the International Monetary Fund is for the reform of the taxation system. In fact the delay in implementing such reforms was one of the causes for not being able to draw down more funds. As such it is very important that we understand the parties’ position on taxation.

The most critical question to be asked is – “Will you ensure that all persons pay their income tax obligations? Additionally we want to know – “are you prepared to prosecute any persons who fail to pay their taxes? We know that one of the objectives of tax reform is to lower tax rates by expanding the tax base so that more persons are paying their fair share. However if the government has no will to aggressively pursue tax evaders then the measures will be doomed to fail. It is my opinion that those who do not pay are well known by the tax department. This has been confirmed many times by the Inland Revenue department in interviews given to the press. Tax reform will not work if it is not combined with a serious effort to collect from all persons. It is time to remove the burden of taxes from the backs of the PAYE persons.

Another major area of concern related to taxation is the number of waivers that are granted each year.

Our question is – “Are you willing to review the tax incentives that are currently given?” We also ask – “Are you prepared to regularly publish a list of those who receive these waivers along with the reason for granting it?” The tax holidays that are now given especially those granted to the hotel sector are not effective in promoting job growth. In fact world wide research has shown that many tax incentives given do not produce any significant benefits. We need a more targeted approach to giving tax holidays targeting those industries that need it order to improve efficiency. Additionally waivers should only be given in certain circumstances for example, charitable donations. Too often these waivers are given to those companies who can afford to pay and these companies turn around and price the products as if they had paid the tax. If we are going to give tax waivers or holidays we need to ensure that the benefit accrues to the public.

Finally in relation to General Consumption Tax (GCT) we want to know – “Will you reduce the rate of GCT especially as it relates to telephone services? I think all persons will agree that 25 and 17.5 percent taxes are too high for a value added tax. By setting the rate so high it encourages businesses to find ways of not paying it and it becomes a burden for the taxpayer especially those who pay PAYE. We need lower rates and we want to know how each party will accomplish this. For tax collection to work the rates to be paid must be seen as reasonable.

Tags: politics, taxation, Transparency