If Government is serious about tax reform, then it is time to stop looking only at the ordinary citizen for more revenue. The people who can best afford to contribute more must also carry their fair share.
Trinidad and Tobago has no capital gains tax, and that has allowed some people to make substantial fortunes from property speculation. In some new housing developments, persons close to the development can acquire properties at early prices based on the original concept, only to sell later at substantially higher prices when the development is completed.
Why should the State receive nothing from that windfall?
A properly designed capital gains tax could capture part of that unearned increase while protecting the genuine homeowner. If someone buys a property as a home and eventually sells it, that is different from repeatedly buying and flipping properties for profit.
Then we have inheritance. Large family fortunes can be passed from one generation to another while the inheritance tax collected by the State is, in many cases, little more than a token. If enormous wealth is transferred, surely the country that helped create the environment in which that wealth was accumulated should receive a reasonable share.
We also need to rethink the fuel subsidy. Why should someone with three or four vehicles receive a greater benefit simply because they consume more subsidised fuel? The working-class family may have one vehicle, or none at all.
Instead, Government should target fuel assistance at those who actually use fuel productively, public transportation, agriculture, fishing and other qualifying productive activities. This could be done through a tax rebate against documented fuel expenses.
There is another advantage: if the rebate is tied to the filing of a tax return, people receiving the benefit would have an incentive to enter the tax system and properly declare their income.
And I strongly support greater use of luxury taxes. If someone wants to spend enormous sums on luxury vehicles, expensive recreational items and other forms of discretionary consumption, let them pay a little more for the privilege.
At the same time, Government should remove VAT from basic food, increase the NIS pension from $3,000 to $3,500 and consider higher taxes on luxury vehicles, cinemas and other non-essential consumption.
This is not about punishing successful people. It is about fairness.
If Government needs more revenue, let us stop treating the ordinary citizen as the easiest target. Tax wealth where wealth is being created, tax speculation where speculation is occurring, tax luxury where people can afford luxury, and give relief where people are struggling to meet the basic cost of living.
A tax system should not be designed simply to collect the maximum amount of money. It should be designed to collect money fairly.
The question is not whether citizens should pay taxes. The question is who should pay, how much they should pay, and whether the system is fair to everyone.
Gordon Laughlin
Westmoorings
