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?