KINGSTON — Discussions aimed at informing the implementation of the tax reform measures in early 2012, is gathering momentum.
On Wednesday, October 26, the Planning Institute of Jamaica (PIOJ) and the University of Technology (UTech) staged a panel discussion on Tax Reform, at the University Campus, in Kingston, with special focus on the proposals outlined in the Green Paper on Tax Reform, tabled in May 2011.
The Government’s Parliamentary Committee is currently conducting consultations on the Green Paper, while the PIOJ, as part of the process, hosted two town Hall meetings, the first of which was held in Manchester on October 12 and the second at the Montego Bay Civic Centre on October 21.
Deputy Director General, PIOJ, Everton McFarlane, in his remarks at the forum, explained that the feedback garnered from the forums would be noted and “filtered into the policy deliberations."
In that regard, he noted that the PIOJ/UTech panel discussion was timely and relevant. “It presents us with an opportunity to engage in collective scholarship around an issue of major social and economic importance,” he added.
Reflecting on the National Planning Summit of 2007, which articulated reform of the tax system as a “critical component of Jamaica’s National Development Strategy,” Mr. McFarlane pointed to the comprehensive and widely accepted report of the 2004 Tax Policy Review Committee, chaired by Mr. Joseph Matalon, commonly referred to as the Matalon Report.
He said that the technical analysis underlying the Matalon Report was harmonised and brought together in a 2007 book published by the PIOJ.
Mr. McFarlane further observed that the last major tax policy reform occurred during the period 1986 to 1991 and culminated in the introduction of the General Consumption Tax (GCT) in October 1991. He said that since then, the Government, with inputs from various stakeholders, has attempted to devise a modern and effective taxation system, with mixed results.
“Over the years, despite good intentions, Jamaica has implemented various tax revenue enhancement measures aimed at meeting budgetary shortfalls, which had the effect of further increasing imbalances in the tax structure, and failed to address issues relating to the complexity, inefficiency and inequity of the tax system,” he noted.
He informed that previous incomplete reform attempts had shown that successful tax reform is as much an art as it is a science. As such, it must take cognizance of the socio-economic and political realities existing at the time that reform is to be undertaken.
“It must recognise and treat with the inevitable winners and losers, and must strike the right balance among several important, but sometimes competing objectives. It should, ideally, be built on a broad-based consensus on the costs, benefits and trade-offs involved in implementation,” he said.
The PIOJ Executive cautioned that while there will be winners, there will also be losers.
"There may be persons or sectors that were previously lightly taxed, for a host of reasons, who must now be asked to bear a fairer share of the burden, while allowing persons or sectors who previously bore a disproportionate share of the tax burden, to lighten their load. What we would certainly want to avoid is a patently inequitable and regressive reform,” he declared.
Mr. McFarlane said that in light of the distributional shifts that will inevitably follow from tax reform, it is “imperative that all stakeholders, including ordinary citizens, take the time to understand the intent and the implications of tax reform proposals, so that our voices can be heard, individually and collectively."
He expressed the hope that the panel discussion will allow participants and stakeholders to reflect on the meaning of tax reform “for you, your family, your community and your country” and how the tax reform proposals “may or may not stimulate economic growth, promote entrepreneurial development and drive business activities across the island."
The forum attracted a wide cross-section of the country’s business and commercial interests as well as students and faculty members.
Panelists included UTech's Legal Counsel and Compliance Officer and Tax Expert, Mrs. Ethlyn Norton Coke, and President of the UTech Foundation, and Partner, Taxation Services, at PricewaterhouseCoopers, Mr. Eric Crawford, who provided an overview of the specific reform proposals, implications of the changes in the GCT and income tax rates, tax compliance, protection of Government revenue base, tax returns, waivers and exemptions and other relevant aspects of tax reform.
By Allan Brooks, JIS Senior Reporter