Tax collection: understanding builds compliance
Published:Wednesday | March 20, 2013 | 12:00 AM
THE EDITOR, Sir:
Inconsistencies that pervade the revenue-collection system cause inordinate delays and consume much time. One contradiction that should be speedily resolved is the requirement to report assessable income for education tax based on Line 41 of the income tax form (IT01) and the confusion at the revenue office when the taxpayer reduces his/her liability by the amount paid through the Pay As You Earn (PAYE) system.
Many times the taxpayer is asked to revise his return at the tax collection centre. This is a travesty. This contempt is compounded when the taxpayer is asked to write a letter stating that an error was made.
But nothing in the taxpayer initial presentation of the taxpayer's liability on the education tax form, ET01, suggests that this course of action is warranted. The reasons are obvious.
Currently, the assessable earnings for education tax are reported on the total line, column 2, page 2 of the ET01 form and the computed tax at the total line, column 3. Since a taxpayer should pay no more or no less than his/her fair share, the amounts already paid should be reported at line d, column 3 and the difference between the computed figures at column 3, total line and column 3, line (d) placed in column 3, line (e).
CHANGE WARRANTED
According to the instructions on the ET01 form, all four figures should be reported at lines 8, 9, 10 and 11 on page one of the aforementioned ET01 form. Line 41 of the IT01 form includes income from employment, and if the taxpayer paid education tax through the PAYE system, we submit that this should be reported at column 3, line (d) on page 2 of the ET01 form and taken to line 9 on page 1 of the said ET 01 form.
We note for the record that line 41 on the IT01 includes pension at line 29, dividends and interest at line 30, yet an asterisk on page 2 of the ET01 form shows that these sources of income are not assessable for education tax. Moreover, education tax from the PAYE system is currently reported on Form S02 and formerly Form ET 03.
We submit that the tax forms need revision if a clear understanding of their preparations can be forged among taxpayer, tax preparer and tax collector. We further opine that a relevant worksheet for tax preparation, like the IT 2012 issued by the Canadian government, should be available on the Tax Administration Jamaica website. This federal worksheet is ostensibly an explanation on how to prepare the tax form.
Understanding builds compliance.
NEVILLE ROBINSON