EDITORIAL - Adding bite to the tax growl

We cannot, at this time, declare on the constitutionality of what Audley Shaw, the shadow finance minister, described as "draconian" and "Gestapo-like" amendments to Jamaica's tax-collection laws, which the Government says it will adjust. We await to see what is actually done.

This newspaper, however, offers two observations: There is a crisis of tax evasion in Jamaica, about which there has been a long and loud public chorus for something to be done; and what was being proposed did not appear to differ in substance from the powers enjoyed by America's Internal Revenue Service (IRS) and Britain's tax authorities.

It is useful, in the circumstances, to be reminded of the problem the Government is attempting to tackle. While Jamaica's tax revenue of around 27 per cent of GDP is within the global range, in our case, it is the few who pay. Of more than 62,000 companies registered in Jamaica, more than 70 per cent are not registered for tax purposes. Only 6,000 firms file tax returns, half of which, or five per cent of all registered companies, actually pay corporate income taxes. One per cent of registered firms pay three-quarters of the collected taxes, which is estimated to be only a fifth of what is due. Half of us do not pay our property taxes.

When it comes to personal income tax, few, apart from pay-as-you-earn (PAYE), contribute. It is estimated that around quarter-million professionals and self-employed persons should be on the tax roll; only about three per cent of that number is.

All bark and no bite

Despite complaints that the tax agencies barked without legislative teeth with which to bite, the talk, until now, had hardly been supported by action. The proposed amendment, though, would have allowed the head of the tax agency, having registered a certificate in the courts, with respect to a tax debt, to proceed "as if the certificate were a judgment against the tax debtor". In that regard, the agency would be able to levy on property owned by the debtor and/or garnish income due to him or her.

Mr Shaw, not unreasonably, intuited that this was in breach of the constitutional separation of powers between the judiciary and the executive and, further, may be offensive to the Charter of Fundamental Rights and Freedoms, by impinging on the individual's right to the ownership and enjoyment of his property without due process. Perhaps! The issue, we felt, was worthy of robust discussion, without partisan divisiveness, on which the Government should lead.

However, administrative power of distraint that was proposed for Jamaica is not unusual to tax authorities in other jurisdictions, including under Section 6331 of the US tax code, which was held as constitutional by America's Supreme Court. Similar authority resides in Her Majesty's Revenue and Customs in the UK. These powers, in the United States and Britain, are subject to adherence by these agencies to their procedures for challenging their assessments. We expected the same to apply in Jamaica. Moreover, given that registering a tax debt certificate in the Jamaican court would have had the effect of a judge's ruling, including for "all proceedings to be taken thereon", it suggested that there was the right to challenge decisions of tax authorities in the Court of Appeal. We hope that the law has not now lost its teeth before it was allowed to bark.

The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.