Many of the most successful businessmen around the world chase tax havens and go to extreme lengths to protect their wealth. The real issue here is not whether such practices should be condoned, but rather efforts must be made to ensure that as much wealth as possible is kept within the country. The fact of the matter is that private enterprise has been proven to advance the world at a much faster and efficient rate than the public sector. Why not charge an acceptable tax rate and further incentivise businessmen to invest in our country?
A tax rate (both corporate and personal) of 10-15% across the board would rank us among one of the most favourable places to earn and store cash. This would increase foreign investment, foreign exchange and overall economic growth. Quite frankly, the countless years of government wastage and inefficiency, has brought public confidence to naught! Putting more money into their hands to face more potential mismanagement is the last thing we need. The reduction in tax revenue will eliminate some of the government’s unproductive spending, and lead to more calculated government investment. Lowering tax is an essential step towards expanding our economy and increasing investment.
Furthermore, we ought to have a tax scheme that rewards companies for their social and economic contributions. For example, companies should receive major tax deductions for:
- giving out scholarships to tertiary level students;
- creating a high number of jobs;
- funding vocational institutions;
- investment in the health care system;
- improving developing markets (eg. Agriculture, Tourism, Arts & Culture, etc.);
- providing employment or training for persons trying to re-integrate themselves into society (namely, persons acquitted after spending years on remand or persons who have served criminal sentences);
- offering internship programs to students and recent graduates; and
- for investing in schools and universities.
It would be imprudent of us to dedicate our time and resources to prosecuting those who seek to evade harsh tax laws, whilst overlooking the root of this issue. Our tax system is backward and is one of many hindrances to our economic growth.
To the sceptics out there, I am not trying to open up our doors to money laundering, on an international or local level. In fact, it is my belief that these more lenient laws will lead to greater adherence with tax requirements and less unscrupulous accounting practices. It is my view that the government should act as a sort of ‘anti-virus software’. They must create an environment where businesses can thrive, and remain in the background while the entrepreneurs upgrade the software of the country. We, the people, need to advance the country, and the government must only be called to action in times of need.
Many countries who boast low tax rates also have some of the highest GDPs per capita across the world. Of course the rate of taxation is not the sole determinant in the level of a country’s GDP, but it may certainly be a contributor. For example, the United Arab Emirates Government does not impose income taxes to companies or individuals living in the country- they have a GDP per capita of around $40,000USD. Additionally, taxable income on companies in Qatar is subject to a 10% rate, and they have a GDP per capita of almost $75,000USD. Singapore’s corporate tax rate is a bit higher at 17% but they still have a GDP per capita of more than $50,000USD. Our corporate tax rate is 25% for ordinary companies, while our GDP per capita is in the region of $20,000USD.
Furthermore, the personal tax is 25% in Trinidad and Tobago, while Qatar and UAE charge 0% personal tax. I would proffer that Trinidad have a flat personal tax rate of no more than 10%. The more money that remains in the hands of the individual would lead to an increase in consumption, investment and business creation. The economy thrives more when individuals spend and invest, as opposed to when their cash is siphoned from their bank accounts into the government coffers.
“Our government still siphons out of the private economy too large a share of personal and business purchasing power and reduces the incentive for risk, investment and effort- thereby aborting our recoveries and stifling our national growth rate” – John F. Kennedy