A Bill which seeks to empower the Minister of Finance and Planning, Dr. the Hon. Peter Phillips, to write off arrears of taxes as well as penalties determined to be uncollectible, was approved by the House of Representatives on March 12.
Piloting the Bill, the Minister noted that this is part of the overall commitment to general tax reform and more specifically, to the modernization of Jamaica’s tax system to make it more in tune with modern tax collection practices.
The Bill also provides for regulations empowering the Minister in respect of providing for a tax debt arrears management system and for the ranking of the debt.
He said the Tax Administration of Jamaica (TAJ) sets targets that are established by the Ministry, within the context of budgetary measures.
“Historically, the TAJ’s success is measured by the ability to deliver these targets, as unpaid arrears are kept in the active inventory of the TAJ and reported to the Ministry of Finance. This large amount of taxes due, probably contribute to an unrealistic collection expectation and the perception of regular breach of the targets by the TAJ,” Dr. Phillips said.
“What this Bill seeks to do is to grant the power, essentially to the TAJ department to make a determination in keeping with modern tax administrative practices and modern business practices, to determine when a tax debt is uncollectible and to grant flexibility to the Tax administration authorities with respect to writing off any of this debt at any point in time,” he added.
Dr. Phillips stated that as of December 2011, there were 70,245 accounts totalling over $230 billion in old debts. Of this $230 billion, approximately $195 billion is over three years old, and only approximately $4 billion is less than six months old, with the remaining amounts between six months and three years.
“What we have is a pool of arrears on the books, much of which represent a small amount of principal, large amount of interest penalty and surcharges and what is being attempted in the Act is to enable the write off of debt where it is deemed by the tax authorities to be non recoverable,” Dr. Phillips stated.
For his part, Opposition Spokesperson on Finance, Audley Shaw, said the Bill should have “been conjoined with the regulations”.
He argued that the legislation should not be approved without the passage of the accompanying regulations.
In his response, Dr. Phillips said the Bill will not come into effect until the regulations are passed.
The Bill will now be sent to the Senate.
By Latonya Linton