In the debate for and against, the income tax in Belize, the following ideas may have some weight.
This goes to pay the way for politicians, police, nurses, clinics and a host of expenses that the government normally has. The subject comes up regularly every five years or so and is rejected by all the major political parties.
a) It ended up being an extortionist system punishing people all over the country.
b) The application of income tax assessments has ruined many businesses.
c) The income tax department wield the income tax laws like crooks practicing EXTORTION.
d) In our centralized system part of the punishment of Income Tax extortionist registered letters, accusing people of owing money in a system designed to make people prove they do not owe money, is extremely expensive to all the rural districts except the Belize District town of the port Belize City. This city gets all government services, but very few of anywhere else in the country get any government office services. This means an ordinary demand for tax payment, must be met with the expense in days of travel, bus trips, hotel bills, meals and taxies, running into the hundreds of dollars. If the tax demand is below the cost of travelling from any of the rural five districts to this port town, the capital of the Belize District, most people will find it cheaper to just pay a low demand settlement.
The problem with this, is that the Income Tax Dept. with it's overzealous employees act like bone breaking Mafia Wiseguys and immediately jump on this payment as proof of undeclared tax payments and undeclared profits. They then start a program of looking back to past years and you get inundated on a regular schedule a few months apart for more extortionist demands for fictitious tax payments. Both for other years, or for revisions. It is a no-win situation for the tax payer living outside of the port Belize City.
If you so much as pay one demand for tax payment, seeking the cheaper way out, if you live anywhere else in the country of Belize in the other five districts, you get blacklisted for more progressive demands of extortionist tax payments. You find yourself caught in a spiral of three or four trips a year to the port of Belize City, to argue your cases. Expenses of accountants. There are few if any accountants, in rural areas. Again, the extra costs benefit only the port city where the income tax office is. It is a manufactured form of internal enforced tourism. The lost days kill a rural small business person, self employed.
Investment suffers. People who would start more than one business give up. Jobs are not there, because of the hassle with extortionist demands from that port town. Business's falter, job making suffers, people migrate abroad seeking better conditions.
While $30 or $40 million is an asset to general revenue, the problems and destructive nature of income tax argue that the country of Belize would be better off without it. That equivalent tax revenue would be better found using some other tax collection by users.
When it comes to Development Issues, the Income Tax is probably in the top five problems of the country.
Not only does it destroy moral, or investments on the local level, it also does not attract foreign capital. Any preliminary investigation by foreigners will fill their ears with all kinds of horror tales of the income tax system in the nation of Belize. This discourages foreign investment. Not only that, coupled with the exchange rate on foreign exchange and the income tax, Belize is not a place for retirees, or wealthy individuals to store their foreign currency. They will pick someplace else like the Bahama's, Turks and Caicos, or Cayman Is., to park their foreign capital.
Belize needs foreign reserves in the country. You can't get it, if you have the income tax and exchange rates. Even Belizeans park their foreign exchange in other countries. This latter fact alone should tell the planners and leaders in our hiearcheal elected autocratic system that this policy is more damaging than the revenue it earns.
While the revenue aspects of an income tax system is attractive for Belmopan and a centralized governing "leadership" dictatorial system, it is only short term attractive to party owners of the country. The effects on the development of Belize is detrimental to any future long term success. If the political constitutional structure ever goes to a democratic system of participatory district governments in a flatter more horizontal model with checks and balances and consensus finding policy making, controlled by the six districts; rather than control by a group of party mafia from the port town, the capital of the Belize District. We will find it more advantageous to get rid of the income tax in order to attract foreign investment, more foreign currency deposits and boost the economy with a wider range of interested individuals bringing in their ideas, industry and capital.
Even the foreign banks that operate in Belize will not get into any many diversified Offshore Business here in Belize. It is not practical in a country that has an income tax, which is also unfairly adminstrated, and also exchange rates. Even Belizeans realize this and bank elsewhere in the world.
What Belize job creation and investment development loses and destroys with the shorter term revenue aspects of the income tax issue is far greater than any revenue generated. It is only necessary from the outlook of a centralized hieracheal government pyramid "leader/ruler" system which needs money now, immediately!
With a more horizontal flatter participatory governing system, the income tax revenues can be done away with. Investments will boom and job creation also boom from natural attributes of the geography of the country. While Belize is truly a land of opportunity, the opportunities that manifest themselves in many aspects will never be realized while there is an income tax. The income tax issue is a DEVELOPMENT ISSUE. The income tax is one facet blocking development, industry and job creation. Foreign exchange commissions another.
Response from Frank Redmond
Ray commented on the revenue generated from Income Tax.
Of all income tax collected, $19 M comes from Btl, and the arguements advanced for the abolition of Income Tax and the introduction of the Business Tax, were that it was not efficient to try and collect the remainder. I do not remember the total income tax as being $35,---much less. Perhaps someone knows the correct figure.
Suffice to say, that after Income Tax was abolished in Belize, it was the USA that insisted that we re-introduce it. Now we have Income tax, Business tax and Sales Tax!