Kerr-Jarrett

It is no secret that at least 50 per cent of eligible taxpayers in this country are currently evading the tax net. I am very disappointed that this administration has, like all previous ones, taken the easy way out by increasing the burden on the already compliant, instead of going after the 50 per cent that are currently operating outside the tax system.

While in opposition, they were one of the biggest proponents for increasing tax compliance and widening the net. Yet, in two years, their efforts to eradicate this inefficiency and injustice have been limited, to say the least. It was obvious, from the start of their administration, that Government revenues would be a challenge in this global recession, yet no proactive moves were made to increase tax compliance.

Now we are faced with these new and burdensome tax measures which show no originality of thought nor any indication that real tax reform is a part of their plan to increase the spending power of Government. Instead we are faced with yet another desperate and short-sighted reaction, as opposed to an insightful and responsive action we expected from good leadership.

Make gct more palatable

Furthermore, the need to increase General Consumption Tax (GCT) could have been an opportunity to start to move ourselves towards a consumption-based tax system by eliminating the payroll taxes, and thereby making the GCT increases more palatable and defensible. However, by applying this new GCT increase, without removing PAYE, has resulted in a lost opportunity to be more equitable and will only result in more hardship on lower and fixed-income earners, as well as promote a greater zeal among unscrupulous merchants to evade this tax wherever they can by pursuing 'cash' transactions.

To go further, the imposition of GCT on construction services, I believe, is very unwise as it will substantially increase, by at least 12 per cent, the base cost of anything in the 'built' environment. This, importantly, includes housing, an essential necessity and a large part of this Government's agenda. Additionally, construction of office space is also negatively impacted as any increase in rental fees need to be kept at a minimum in order for us to compete in the industrial arena, particularly the ICT sector where we are already at a disadvantage with our rental rates being some of the highest in the region.

Furthermore, the application of GCT on solar water heating is totally counterproductive. From all indications, we have been encouraged, over the last year, to move towards renewable energy resources. This increase will only serve to deter the purchase and implementing of solar-energy products.

Greater levels of cutbacks

Last, this tax package also puts employers under even greater strain as employees will be looking to them to help lessen the load by increased salaries. To put this probability in perspective, one must remember that earlier this year the tax-free allowances on rental allowances was removed, which was effectively a 12.5 per cent tax increase on salaries. Further increases, through this additional taxation, will ultimately result in a greater level of cutbacks and, therefore, job terminations and lay-offs as employers struggle to meet their expenses while remaining productive.

This is no time to make "a stab in the dark" at increasing revenues. Any increase in taxes, or any other application, that results in an excessive burden on the majority of citizens in this nation, must be not just expedient but equitable. Faced with having to administer such a foul-tasting medicine to the nation, the Government would be advised to use this valuable opportunity wisely by implementing effective and long lasting tax reform.

It is time that we evolve our thinking beyond panic and 'one-off' solutions and truly engage in constructive reform. This crisis provides the opportunity of a lifetime to change the way we do business as a nation. Mr Prime Minister, do not squander it, history will not be kind to you, and the nation you pledged to serve will not quickly forget.

Mark Kerr-Jarrett is Managing Director of Barnett Ltd in St James. Send feedback to columns@gleanerjm.com