Jamaica Talks Flat Tax for Informal Sector

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Above: Commerce Minister Dr Christopher Tufton and Finance Minister Audley Shaw

By the Caribbean Journal staff

The Chartered Accountants of Jamaica have proposed applying a flat tax rate for operators in the country’s informal sector, like taxi drivers and vendors, who often “escape the government’s tax net.”

Getting unpaid and unfilled taxes has been a priority for Jamaica’s Ministry of Finance.

“They make money but they are not filing a return or anything,” said Ethlyn Norton-Coke, who made the proposal at a meeting of the Committee on Tax Measures at the Ministry of Finance in Kingston. “Charge them a flat rate, whether it is [$175 or $350]. If they feel that amount is too much, then they can file a return, because right now [the government] is not getting much out of them.”

MP for South St Andrew Omar Davies questioned the practicality of the proposal, however, saying it would be difficult to charge a “fair flat rate” for persons involved in different spectra of the commercial sector.

“That would need to be worked out, because you have so many layers,” he said. “You have used the example of the taxi driver, but what about the two bananas, one orange person at the traffic light. How do you deal with that?

Norton-Coke said that filing a return was a natural solution to that kind of problem.

The nature of the informal sector, in which many people fail to keep current and accurate financial records would pose a challenge in that regard, Commerce Minister Dr Christopher Tufton said.

“They often have no records of their transactions and you would have to guide them in terms of how they actually go about filing these returns,” he said.

In May, Finance Minister Audley Shaw tabled a Green Paper on tax reform in the House of Representatives, which seeks to look at issues with the country’s tax system.

Jamaica’s last major tax reform took place from 1986 to 1991, when a general consumption tax was introduced.