"If the law supposed that ... the law is an ass ... an idiot." Mr Bumble of Oliver Twist fame has summarised the public's response to the Government's tax package. By and large, some of the measures are viewed as unenforceable, ineffective and unjust.

While all that might be true, there is an even more frightening fact: the Jamaican taxation system, taken as a whole, is 'Bumblelike', unenforceable, ineffective and unjust. In the view of the Jamaica Confederation of Trade Unions (JCTU), this is the fundamental problem, because it lies at the heart of our fiscal problems.

"Of 178 economies covered by the last 'Doing Business Survey', Jamaica was listed among the worst 10 countries, where it was most difficult to pay taxes, due to the number of different tax types, payment dates and tax rates." Even more disturbing, is the growing consensus that the tax system is not only unjust and inefficient, but that it is a major obstacle to economic growth, job creation and the maintenance of social cohesion. The Government's stop-gap tax proposals are a reflection of those facts.

The JCTU is very concerned that this fundamental issue is being ignored in the anger about a specific tax package. Last year, the JCTU presented a document entitled 'A Case of Fiscal Injustice' to every member of Parliament and the Senate. We got responses from four individuals only. In that document, we pointed out the critical need for taxation reform in Jamaica and expressed our support for the Matalon Tax Reform Committee proposals. The fact of the matter is that the Parliament of Jamaica has allowed a flawed taxation system to exist in Jamaica over an extended period.

In light of our historical fiscal problems, it is impossible to comprehend that the following examples have been allowed to exist over an extended period.

Ineffective Tax Administration

For many years, Jamaica has been plagued by problems with its tax administration. Fundamentally, it lives off the revenue of 350,000 pay-as-you-earn (PAYE) workers, many of whom are unionised, income tax on interest that is held by banks and other companies, and general consumption tax (GCT) collections from a relatively small number of firms.

fails to collect income tax

The system fails to collect income tax from the 'self-employed', which represents the majority of the individuals in the Jamaica labour market. It is estimated that the loss from this source is 50 per cent of the collected figure. Rough estimates would be that this is an additional $30 billion - $40 billion per year.

The Inter-American Development Bank in 2008 estimated the following:

"1(a) One per cent of Jamaica's firms pay 71 per cent of all corporate income tax collected;

(b) One per cent of registered entities account for 60 per cent of all PAYE collected;

(c) One per cent of corporations pay 58 per cent of all GCT collected.

2 (a) The Special Problem of Tax Incentives:

(b) The system of tax incentives in Jamaica is a special problem. The Government does not know the full extent of the incentives it has given nor are these tracked on a regular basis."

It is estimated that the Government has given over 200,000 incentives foregoing taxes that amounted to approximately one-fifth of Government's total tax revenue. These two examples clearly indicate that the Government's perennial fiscal problems are self-inflicted. What the Parliament of Jamaica needs to do urgently is to agree on tax-reform measures that would lead to a taxation system that is equitable, just, and effective, one that promotes economic growth, job creation and social cohesion.

The Parliament of Jamaica must ensure that the taxation system in Jamaica is not regarded as one of the worst in the world.

oyd Goodleigh is general secretary of the Jamaica Confederation of Trade Unions. Feedback may be sent to columns@gleanerjm.com.