“If you are enjoying Jamaica’s benefits, you must pay your taxes,” – Don Wehby, minister without portfolio in the Ministry of Finance

This impassioned declaration came from Minister Wehby as he spoke recently at a First Global Bank corporate breakfast, where he shared highlights of the 2008/09 Budget Debate.

His comments came against the background that some 40 per cent of Jamaica’s productive activity was taking place in the grey or underground economy. The income of these persons is not reported, so although they are benefiting from the amenities of the country, they contribute little or nothing to the tax coffer.

Wehby’s message was clear: the time had come for Jamaicans to change their attitudes about paying taxes, and the government was prepared to use both persuasive and punitive methods to ensure that delinquent taxpayers toe the line.

Like any other business that’s faced with large receivables, the government has had to think creatively to bring in the outstanding amounts owed by its creditors, the delinquent taxpayers. Tax arrears have been estimated at J$138 billion including penalties and interest, and this sum would go a far way in financing the budget, so that we could borrow less to meet the country’s requirements.

Tax compliance through amnesty

The first step announced by the Ministry is that it is giving delinquent income earners a ‘bligh’ by providing an amnesty period where they can pay up all taxes owed without having to pay the normal interest and penalties due. This is a tremendous benefit, as it gives persons a chance to become compliant, without being afraid that they will be targeted by the tax authorities, and that they will lose all they own due to the high penalty and interest charges.

The tax amnesty covers all tax types; income tax, PAYE, property tax, general consumption tax, special consumption tax, education tax, transfer tax, stamp duty, asset tax, and contractors levy. Once you pay the principal owed in full by June 30, 2008 your tax ‘sins’ will be completely pardoned. After that date, the following levels of waiver of penalties and interest will be applied: pay by July 31 – 80 per cent; August 31 – 50 per cent; September 30 – 40 per cent; and October 31 – 20 per cent. The amnesty period ends on October 31, 2008.

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Finance Minister, Audley Shaw during his budget presentation, addressed the concerns of those who dislike paying taxes because they feel their money is wasted. Shaw declared, “the government is ever mindful that engendering a culture of increased tax compliance from the electorate and business community must represent an ideal social partnership in which our taxes are paid, are paid on time, and the Government in turn pledges to spend those tax dollars in an efficient, open, corrupt-free and transparent way, such that taxpayers can see, feel and experience value for money in government expenditure.”

Tax compliance through reform

Along with the amnesty to allow tax offenders to voluntary become regularized, the Finance Ministry is also pursuing a strategy to improve revenue collections through reform of the tax system. Wehby pointed out that the ministry was determined to enhance its operations to be more effective in bringing the underground economy into the tax base.

Wehby outlined some of the measures that would be undertaken to achieve this goal. He said that a detailed administration reform to improve the organization and management of the Tax Administration would be carried out, which would include ensuring that the departments were adequately staffed and employees properly trained.

The ministry would also focus on improving the information technology and communication capabilities of the various tax departments. Wehby noted that people could evade paying some of their taxes because the departments’ systems were not linked to track all their activities. Once these improvements were made, it would be harder for persons to escape the tax net.

Other steps announced to improve tax collection include the re-establishing of the Revenue Protection Division (RPD), to protect major revenue sources from tax leakage through corruption and fraud.

Based on all these declarations coming from the Ministry of Finance, it’s pretty clear that the government is determined to enforce the country’s tax laws. If you know that you’re delinquent, it definitely would be a smart move to take advantage of the tax amnesty. You have just two months to get your act together, so start immediately by taking these steps:

– Organize all the bills, receipts, invoices, and other documentation that relate to your business activity;
– Contact an accountant at once, so that you will have enough time to prepare the necessary tax forms to catch the deadline;
– Deal with the older payments first if you are really far behind in paying your tax obligations, as these will attract larger interest and penalty amounts.

According to the Tax Administration Department, you don’t need to make a formal application in order to benefit from the tax amnesty, so get going now!