APPARENTLY A lively black market trade is emerging in, of all things, books. In recent weeks, some $500,000 worth of books, the property of Novelty Trading Company, was stolen at the wharf. Company officials believe the theft of the imported textbooks and children's books is linked to the development of an underground book market.
Books, rather unlikely products for the black market trade in Jamaica, it seems has joined gasolene, cigarettes, liquor, gaming tickets and any number of other products in the large, tax-evading underground trade.
One of our lead stories last week reported on the proliferation of illegal gas stations in the Corporate Area and elsewhere. Several accidents over the last few years have not curbed the proliferation of the illegal trade in gasolene.
The biggest incentive for the illegal book trade, as in the other cases of legal products on the black market, seems to be the evasion of taxes. People will always seek to beat the system, but the more onerous taxation is the more lucrative it becomes to offer goods and services illegally, minus the tax component of price. Before the addition of taxes to books, the book industry saw little, if any, sign of a black market. The biggest segment of the book market is textbooks for schools which many parents already can ill afford even at market prices without taxes. Last Wednesday, Finance Minister, Dr. Omar Davies, advised the House Parliamentary Committee on Tax Measures that, "Cabinet, led by the Prime Minister, came to the conclusion that despite the cost, we are going to reverse the original position and there will be zero rating for all books and reading materials."
The tax component of the ex-refinery price of gasolene now stands at 47 per cent. It is not surprising, therefore, that many motorists are prepared to risk their safety and product quality at sub-standard illegal "gas stations" to achieve substantial savings. This is particularly true for margin gatherers in the informal transport sector, rife with cut-throat competition, who cannot readily pass on higher costs to clients.
Economists have long known what common sense suggests that high tax levels stimulate smuggling and the black market, while lower, fairer rates tend to engender greater compliance. The Government has devoted a great deal of time and energy to plugging loopholes for tax evasion. In response, more creative methods of evasion have simply emerged. The back-pedalling of the Government on several new tax measures announced in the Budget for this fiscal year, following lobby pressure and with memories of the 1999 gas tax riot still painfully fresh, should herald a new and more enlightened approach to raising revenue.
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