There has been much talk recently about tax reform and
whilst I doubt the government will do anything drastic and are just interested
in squeezing more tax dollars from an over taxed population. I would still like
to make some suggestions to the three wise men at the Ministry of Finance.
The current Pay-As-You-Earn (PAYE), flat rate of 25% is
inherently unfair, it lays the burden of taxation on the middle class, not even
in the USA
the capital of capitalism is there such a bias.
I propose a three tier tax rate - 20% on the first 2 million
dollars, 30% for 2 to 5 million and 40% above 5 million, leaving the tax credit
in place and at $250,000.00, and of course eliminating Education tax and NIS which
will be funded from the PAYE.
NHT should be voluntary, anyone who wishes to derive a
benefit must contribute for 5 years before and after they receive their benefit.
This would leave more money in the hands of the middle class,
and make the NHT contribution directly related to the beneficiary.
The savings would be spent on basic items from which the
government would collect GCT. This proposal would have the effect of
stimulating the economy and have no negative impact on the tax coffers of the
government.
As for corporations, the corporate tax rate of 33% is one of
the highest in the world, coupled with the company’s tax contribution to NIS, Education TAX, HEART
and NHT and we have a tax burden that is largely responsible for the 80%
failure rate of new companies. If Jamaica is to turn around its
downward trend we must stimulate local businesses and the most important step
is to ease this burden. Make the corporate tax rate the same as the individual rate
and this will remove a significant deterrent to many ‘hustlers’ from
formalizing their operations.
These proposals are simple they restructure the tax burden and
would stimulate the economy and set an environment that will put Jamaica on a
path of growth and development.
