The Editor, Sir:

It is tax time again and the discussions and governmental threats of prosecution intensify alongside new suggestions on how to tax prostitutes, drug dealers, churches, deejays and soon someone may soon suggest murderers or even illegal gun and ammunition sellers in an attempt to bring those outside the tax net into it - to no avail. Now we need to think outside the book and boxes with mounds of studies and committee reports that never get implemented.

Sir, if Mr. O. B. Golding and his government are serious and bold about tax collection and a government for the people they should implement a simple single-tax system that brings everyone into it by making the General Consumption Tax (GCT) of 20-25 per cent the only tax.

This single-tax system would tax consumption, level the playing field, and reduce governmental expenditure and associated corruption. A single-tax system would reduce the cost of compliance, free up the hosts of government tax collectors to find more productive endeavours, some of whom are at present trying desperately to make blood out of stone to no avail. Businesses spend billions of dollars on accountants around this time of year and throughout on a myriad of accountants and lawyers in an effort to comply with the complicated tax regulations; and in some cases keeping out of jail and away from the tax courts or other government-sponsored misery the myriad of departments, forms, free up money from businesses that has to be tied up and spent on accountants etc. I say GCT because in the recent past it was said to be the most efficient tax regime in Jamaica.

Cases to consider

To illustrate the principle, let us look at three cases: a head of a large corporation, a drug dealer, and a teacher. The drug dealer earns thirty million dollars per annum but since he is outside the tax net, except for GCT at 16.5 per cent, has an advantage of having a greater portion of that income free to dispose of in anyway he/she wants, gas-guzzling motor vehicles, clothes, houses, travel, liquor, gambling or even to church collection coffers.

The teacher and the corporate executive to a lesser or greater extent have no choice in the matter, paying 25 per cent income tax. Then there is Housing Trust, Education Tax, National Insurance and soon someone will be calling for a health tax all to be borne by the same already overtaxed employers and employees for the benefit of all including the beneficiaries of the estimated 40 per cent informal sector within the economy. There is also an unfair, punitive and outdated 40 per cent p.a. tax on late or on mutually agreed taxes to be paid over time levied on habitual taxpayers, as non-payers are as free as a bird. This does more harm than good to the tax collection efforts by creating an incentive for others to stay away.

The real test

A single tax would be more equitable and the real test for a good tax system is that it should be, fair, understandable and efficient. Our tax system does the exact opposite. The high-income earners would have an incentive to be more productive, encouraging investment by removing distortions caused by ineffective government interventions, incentives, waivers, exemptions, remissions, tax holidays etc. More revenues would be produced through the availability of more disposable income, while the need for tax avoidance and tax evasion is vastly reduced.

This could encourage growth in the economy, increased levels of employment, crime and corruption reduction, reduced inflation and an overall improvement in the quality of health care, roads, security and life for everyone. The Minister of Finance should immediately pursue making the GCT the single and only tax. In the past weeks there have been at least one entertainer among prominent figures hauled before the courts for taxes, a case which continues to give the convoluted tax system a bad rap, encourages flight of capital. Taxes waste the courts' time. With a single GCT-based tax system I and my neighbour would be happy. Mr Shaw as minister of finance you should move full speed ahead on this single one.

I am, etc.,

MICHAEL SPENCE

Micspen2@hotmail.com

P.O. 630

Liguanea, Kgn 6