Minister without Portfolio in the Ministry of Finance and the Public Service, Senator Don Wehby, has reiterated Government's commitment to undertaking a comprehensive tax reform programme for Jamaica.

Speaking at the Institute of Chartered Accountants of Jamaica's (ICAJ's) Tax Focus seminar at the Hilton Kingston Hotel on April 30, Senator Wehby said the administration was of the view that this was the only way that the country could achieve financial sustainability and create an environment conducive to economic growth.

The minister noted that the last "meaningful" tax reform undertaken in Jamaica was in 1986 and another one was "long overdue". He further said that the programme to be undertaken during the 2008/09 fiscal year was "principally designed to enhance simplicity and equity of the tax system" and to improve compliance across all categories of taxes.
Senator Wehby declared that reports from the World Bank and auditing firm, PricewaterhouseCoopers, ranked Jamaica among the bottom 10 of 178 countries in relation to ease of revenue payments.

In addition, the November 2007 Inter-American Development Bank report shows that one per cent of companies pay 71 per cent of Corporate Income Tax collected, one per cent of registered entities account for 60 per cent of Pay As You Earn (PAYE) collected, and one per cent of corporations pay 58 per cent of General Consumption (GCT) collected.
"Basically what that is saying... is that we really have a compliance problem," the minister stated.

He noted that with 40 per cent of the economy "unregistered and untaxed", the first objective of Government would be to reduce that figure and broaden the tax base before focusing on "other areas of taxes and reduction of rates as the Government needed to "protect our revenue inflows".

He said, however, that efforts were made to satisfy some of the "growth growers", in terms of withholding tax on dividends, in order to facilitate company groups' circulation of funds for productive purposes, among other things.

"We really wanted to do much more, but the timing was just not right in terms of the fiscal situation that we found ourselves in (and) what is happening in the global economy in terms of food prices and oil prices.
However, I would say. that we are fully committed (to) tax reform (and) will focus on administrative reform for phase one," the minister said.

In the meantime, Senator Wehby informed that the planning and project mechanism for the reform programme was in place. "It will be divided into four stages: organization and management; information and communication technology; revenue inflows: and voluntary compliance," he disclosed, adding that: "It is the responsibility of Government and of the policymakers to ensure that our tax administration personnel have the adequate resources to do their job."

To this end, he announced several measures, which will be pursued. These include: The development of a long-term information technology (IT) strategy by Fiscal Services Limited to, among other things, improve on the current integrated computerized tax systems.

"We'll also be looking at online e-payments and e-filing facilities beginning with GCT returns," he said.

Other initiatives to be pursued, Senator Wehby outlined, include a seamless interface between tax and customs database information aimed at improving compliance; and data warehouse and other management information systems to provide on-demand reports to inform and support strategic and operational decisions. Additionally, he said there were plans to establish a larger tax payer unit for both audit and collections, "to ensure timely and comprehensive management of accounts with significant monetary value."

"One of the things that we have also seen (is) that (regarding) the Income Tax Act, there are a number of ambiguities in there, and what we have suggested is that there needs to be some amount of re-drafting to avoid these misinterpretations so that we can protect our revenue a little better," said Senator Wehby.

The senator warned that the tax amnesty will not be repeated. During his budget presentation, Finance Minister Audley Shaw announced the waiving of interest and penalties ranging between 20 and 100 per cent, once the principal sum is paid over a five month period between June and October 31, when the amnesty ends.

Senator Wehby said that persons might be inclined to think that since an amnesty was being given this year, there was the possibility of another in the next calendar year.

"That is not the intention (of the government), and we have no intention of repeating the amnesty programme, so I would encourage all to take advantage of the tax amnesty for 2008... because you will not be seeing it again... the amnesty programme will not be repeaterd," said Senator Wehby.

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