The downside of direct taxation

As our government ponders the what- when and how to raise money to pay for not only the current deficit but possible future ones may I add a word of caution concerning the implementation of direct taxation either in the form of a sales tax or income tax.

Both ‘solutions’ will bring with them further problems and additional costs. In order to control and monitor any new form of direct taxation will require an increase in the civil service. Whether it is called the IRS or Inland Revenue it will require a large number of staff to police the tax system. Many already consider that the current staffing levels of the Civil Service are too high and costly. How much will it cost to staff a tax department?? I can assure you it will be many millions.

In addition, if an income tax is introduced it will take no time at all for the ‘cash’ sub culture to spring up. All of us who have lived in jurisdictions with direct taxation are well aware of the ‘two price’ culture. One price (higher) for the official/legal transaction and another price (lower) for cash/no invoice etc.

Anybody who believes that every resident liable for income tax is going to happily contribute without many seeking ways to avoid it, are sadly very mistaken.

The same problems arise with a sales tax. One price with an invoice or receipt – another for cash and no receipt.

Do we really wish to develop down these roads?

One thing the Government HAS to do when coming up with new revenue raising schemes is to ensure that in doing so there is not an increase in current costs.

That is why the raising of import duties and or permit/fees seems to me to be more appealing of all of the bad medicine that is being bandied around.

If those increased revenues do not bring in enough to bridge the gap between income and expenditure then we should do what all good housekeepers due – we cut our expenditures. We should not spend a dollar more than we have in the purse.
Almost everyone who lives here can give you a list of ‘waste’ that we see every day we travel the Island. Perhaps you should have a web page where residents can post their cost saving suggestion for forwarding on to our worthy leaders?

Alan Darvill

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