Such an argument, especially when it comes from senior ministers, not only insults the intelligence of the Jamaican people, but erodes the credibility of the administration, diminishes trust, and risks undermining public support for the difficult measures that are necessary to haul the country from its deep economic crisis. What is required is for Jamaicans to be given the facts frankly, and for there to be equity in how the burden the country will have to bear is shared.
It was the failure of this sense of equity in the initial $21.8 billion tax package, unveiled by Finance Minister Audley Shaw, which triggered the public revolt, causing Mr Golding to revise the measures in his December 23 broadcast. Mr Shaw's proposals, particularly the increase of the rate of the general consumption tax (GCT), and the widening of the range of goods and services that came under its cover, were deemed to be skewed against the poor.
The Government has retreated from applying GCT to more products. And on the face of it, the new measures, including raising the rate of personal income tax by between 2.5 and 10 percentage points, for people who earn over J$4 million annually, are finding better favour with the public.
Stop-gap measure
Mr Golding, however, would be wrong to feel that all is now well on the taxation front and that the administration can now concentrate on completing negotiations with the International Monetary Fund for US$1.2 billion in credit for balance-of-payments support. The fact is that the adjustment of the tax rate on, in the context of Jamaica, high-end earners, is, at best, only a stop-gap measure. There is need for broader tax reform and a more aggressive effort at tax collection. The administration must, as a matter of urgency, revisit the Matalon Report of six years ago and move to implement its recommendations with the necessary updates.
Indeed, if the political will exists, widening the tax net is not as hard to do as is often made out by public officials.
More than a year and a half ago, Mr Golding told Parliament that outside of pay-as-you-earn employees, a mere 4,000 other persons were in Jamaica's income tax roll. His estimate was that the figure should be in the region of a quarter of a million. Many of those who escape the tax net are themselves high-income earners, who are quite visible and easily identified, like the bulk of the 500 doctors, who, according to Mr Golding, a recent survey indicated were not on the tax roll. Not only must tax evaders be pursued, but the Government should provide monthly updates on compliance. Enhanced compliance will earn far more than the $1.3 billion the Government expects to collect because of the rate adjustments.
Improved tax compliance, is of course, only one element in the equation for fixing Jamaica's problems. There is much heavy-lifting to be done, for which the Government will need lots of help.
This is no time for cheap politics and cynicism.
The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.