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Dated: 1 December 2002
The compliance rate for General Consumption Tax (GCT) in Jamaica is above the international standard of just over 70 per cent, as the local compliance rate reached between 73 – 75 per cent.
The latest figures show that in April to September, total CGT collected amounted to $13.505 billion, compared with $13.132 billion projected.
Of the total amounted collected, local GCT amounted to $8.216 billion, compared to $7.623 billion projected, whilst GCT on imports reaped $5.289 billion as against $5.509 billion budgeted for collection. This trend is expected to continue for the remainder of 2002.
“I don’t see any indications that the steady trend will change”, said Senior Fiscal Economist at the Ministry of Finance & Planning, Courtney Williams, in an interview with Businessuite. He noted that the improvement in GCT compliance came as the country continued to benefit from the Tax Administration Reform Project introduced by the World Bank in 1994.
The tax reform project was aimed at reorganizing the tax departments by function rather than by tax type, which now sees tax auditors auditing both GCT and income tax. As a result, there has been a greater degree of information sharing, which has led to more persons being brought into the tax net, as well as an increase in compliance.
Earlier this year, in the April – July figures, just over $9 billion was collected in total GCT. This represented an increase of $411 million or 4.7 per cent over the budgeted figure, and a $1.5 billion or 20 per cent increase over the corresponding period in 2001.
Of that total GCT collected, $5.387 billion or 59.8 per cent represented local GCT, whilst $3.622 billion or 40.2 per cent was for GCT collected by the Customs Department on imported goods.
Both types of GCT collected were above their respective budgeted figure. But whilst the difference was marginal in the case of GCT on imports, the amount collected on local consumption was 8.1 per cent above budget.
Clive Nicholas, Director General, Tax Administration, said that the street surveys, which his department had conducted, had uncovered and brought into the GCT net many businesses which had previously managed to evade the tax.
“This forced registration drive has been very successful”, Mr. Nicholas said, adding, “but it is difficult to catch those persons operating their business from home”.
Mr. Nicholas said the monitoring of Tax Registration Number (TRN) system for taxpayers has also assisted their ability to track down GCT and other tax evaders. He noted that even with the severe penalties, people continue to evade taxes.
The penalty for failing to file is 15 per cent, and another 15 per cent for failure to pay the tax. This also attracts an addition 2.5 per cent compounded, on the balance outstanding, as well as a 10 per cent surcharge.
The tax reform project ended last year at a cost of $32.18 million. A final report on the project said it had achieved its development objective with tax revenues, excluding customs, increasing from 22.26% of GDP in 1995/96 to 24.22% in 2000/01, and by 8.9% in real terms without increased tax rates.
The report also said that the number of registered taxpayers had increased by 60% since 1995/96. It further stated that while the functioning of tax administration was already visible in the form of improved collection, increased taxpayer registration, increased audit productivity and enhanced taxpayer satisfaction, more time was needed to fully assess the impact of the project. This, it said, was due to the fact that the new organizational structure and information systems had only recently been implemented.
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