ONE IMPORTANT factor which validates a government's right in a democracy to tax its citizens is that the tax regime should be fair and administered in accordance with the ethical principle of 'distributive justice'. The rate of tax for each category of taxpayer should be the same for all taxpayers in that category and be enforced with equal force against all members of each category.
Given the present state of the Jamaican economy the population is already being primed to face steep tax increases in the forthcoming Budget but we, in turn, need to remind Government that it will be counter-productive simply to increase the tax burden of those individuals and companies already paying more than their fair share. In this category are the country's general workforce, men and women whose wages are automatically reduced by PAYE taxes withheld at source and public companies quoted on the Stock Exchange which have special reporting responsibilities and are subject to heightened scrutiny by the tax authorities. These are easy targets, traditional 'milch cows' when government takes a line of least resistance approach to increasing its revenue stream.
SuperClubs boss, John Issa, has pointed out the inequitable tax burden placed on workers subject to PAYE withholding tax but his cries for justice have fallen on deaf ears. In the case of corporate income tax, a rate of 33.3 per cent is about the upper limit in non-socialist societies. In a stagnant formal economy, having to pay over to government more than 33 cents out of each hard-earned dollar comes close to stifling the entrepreneurial spirit and prevents the accumulation of capital to allow for private sector expansion.
The time has come for Government to spread the tax net more equitably to take in the informal sector which may now account for more than 50 per cent of Gross Domestic Product (GDP). The tax collecting bureaucracy must be given the resources to collect from those who make profits in this sector, as well as those who cheat on paying over General Consumption Tax (GCT) and those whose lifestyles obviously exceed the level of their legitimate income.
In this connection, it should be remembered that when the American authorities could not indict Al Capone, the Chicago gangster, for murder, they were able to lock him away for income tax fraud. In Jamaica, we need to re-energise the Revenue Court with judges who are willing and able to be proactive in putting an end to tax evasion. This may call for new legislation and streamlining procedures across the board to ensure that time is of the essence.
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