Opposition Leader Encourages Integration of Tax Systems To Improve Compliance

Leader of the Opposition, Mark Golding, is urging the Government to look at the structural integration of the country’s tax systems to improve automatic compliance and tackle tax evasion.

Delivering his contribution to the 2016/2027 Budget Debate in the House of Representatives on Tuesday (March 17), Mr. Golding said some estimates suggest that the country could realise up to $60 billion annually from the measure.

He cited General Consumption Tax (GCT) as one area that could see improvements in collection.

He noted that under the existing system, businesses collect taxes at the point of sale, and hold these funds in their cash flow before remitting them at a later date. That time lag, he argued, creates opportunity for under-reporting, inflated input credits, nil returns despite commercial activity, and fraudulent refund claims.

“Enforcement relies heavily on audits after the fact, and these are costly and necessarily selective and unevenly applied. Many countries have addressed this, not by raising rates but by redesigning the tax architecture. Electronic invoicing systems are now standard across much of Latin America and parts of Europe and Asia, requiring invoices to be digitally validated in near real time. Every transaction is time-stamped. Every input credit must match a verified supplier invoice. Returns are auto populated from validated data,” he said.

He noted that the shift is transformative, as it moves the system from post-event enforcement to transaction level verification.

“The documented increase in revenue collections from implementing these systems actually range from five to 15 per cent depending on the level of previous compliance. For Jamaica, even a conservative projection of two per cent improvement in effective GCT and Special Consumption Tax (SCT)) realisation would yield $8.6 billion annually,” Mr. Golding told the House.

He noted that a modern compliance system would automatically link income tax declarations to GCT turnover data, Customs imports, payroll filings, beneficial ownership records, director compliance histories and municipal approvals.

“For example, if a company imports $150 million in goods but declares $20 million in turnover and a tax loss, the system should flag the anomaly automatically,” he pointed out.

Mr. Golding noted further that municipal building approvals represent hundreds of billions of dollars in economic activity annually, yet they are disconnected from tax reporting systems. A developer may construct a $600-million project while filing minimal GCT returns or declaring limited income, he said.

“Connectivity is needed. Once a building permit is issued, the approved project value should be logged in the tax system, and returns should then auto-populate a project disclosure section,” Mr. Golding added.