Reseach Question: How doesTax Amnesty affect the Revenue Collection of theTax Administration ofJamaicaReseach Question: How doesTax Amnesty affect the Revenue Collection of theTax Administration ofJamaicaReseach Question: How doesTax Amnesty affect the Revenue Collection of theTax Administration ofJamaicaReseach Question: How doesTax Amnesty affect the Revenue Collection of theTax Administration ofJamaicaResearch Topic: How does Tax Amnestyaffect the Revenue Collection in Jamaica?Taxamnesty does have an impact on a country’s revenue, whether positively ornegatively. Research shows that it canpositively impact revenue as it is an opportunity to capture taxpayersoperating under the radar, an opportunity in the long-term, as these negligenttaxpayers will be brought into the tax net and captured in the system goingforward. (Mattiello, 2005:3-4; Adreoniet .Al, 1986: 10; Alm et. Al.
, 1990:25;Ida Farida Adi Prawira, 2015; John L. Mikesell and Justin M. Ross, 2012; HariSharan Luitel and Russell Sobel, 2007; Osman Faith Satacoglu and Eren Caskurlu,2011; James Alm, Jorge Martinez-Vazquez and Sally Wallace, 2009). There are likewise short-term benefits as thisis an opportunity to retrieve money, owed to the country that would probablynever have been received in the absence of an amnesty. It is therefore ashort-term revenue generator as taxpayers tend to go back to their negligentways once the amnesty ends, taking advantage of this period where certainsanctions and penalties are waived.
Tax amnesties therefore might be mostimpactful in the short-term. (Lutiel and Sobel, 2007; Alm et al, 2009). For example Alm et al states that proponentsto the tax amnesties cite the short term revenue impact as justification forthis compliance strategy as individuals take advantage of the grace period topay unpaid taxes. Itshould be noted that for an amnesty to positively impact a country’s revenue,the amnesty must be non-repetitive, offered at the right time, the tax systems bevery effective and structured to balance compliant and non-compliant taxpayers,provide excellent services and law enforcements (Hari Sharan Luitel and RussellSobel, 2007; Pinaki Bose and Michael Jetter Alm et al, 2009; Prawira, 2015). While there is a great possibility that taxamnesties may positively impact a country’s revenue the downside is that theremight be a reduction in revenue in the long run. It is said to create an expectation intaxpayer’s mind that there will be another one in the future.
For example according to Mikesell, almost allthe total of tax payers who participates in the tax amnesties believes that taxamnesties effects the repetition of the tax offences. As the tax amnesties generallycreate favourable expectation for future taxpayers, are encouraged to evade. Research shows that this expectation will thenallow negligent taxpayers to become relaxed waiting on a moment to arise totake advantage of another amnesty (Ida Farida Adi Prawira, 2015; Pinaki Boseand Michael Jetter).
This expectationand dependency may lead to taxpayers, both dishonest and honest, to becomenon-compliant, especially in the seasons before an amnesty and if the amnestybecomes repetitive (John L. Mikesell and Justin M. Ross, 2012; Hari SharanLuitel and Russell Sobel, 2007; Osman Faith Satacoglu and Eren Caskurlu, 2011). For example Alm et al questions whetherhonest tax payers resent the special treatment being offered to the tax evadersand consequently, in the long run compliance may decline. Mikesell and Rossstates that tax amnesty indirectly encourages delinquency, on-compliance andevasion especially when it no longer a “one time offer” as collectors tend todecline although the time period is typically lengthened.
Compliancemay also decrease as a result of loss of confidence in authority as taxamnesties lead to the degrading of the authority’s creditability. This system might also be seen as an unfairavenue for taxpayers who are compliant (John L. Mikesell and Justin M. Ross,2012; Hari Sharan Luitel and Russell Sobel, 2007, Lerman, 1986:326; Osman FaithSatacoglu and Eren Caskurlu, 2011; James Alm, Jorge Martinez-Vazquez and SallyWallace, 2009) Robustmeasures must be in place to reduce the negative impact of tax amnesties as itrelates to compliance.
Increasing the level of education offered to taxpayers,as to their responsibilities as well as a boost in audits after the amnestyperiod with the introduction of stronger sanctions and penalties would be aneffective effort to combat those who use this period as an opportunity to evadetax and become non-compliant. Alm.et. al, expressed the argumentthat future tax compliance (and ensuing future tax revenues) may increase ifthe amnesty is coupled with extensive public relations strategy at educatingthe taxpayers towards improved responsibilities and the implementation ofstricter post-amnesty penalties for evaders. (Alm et al, 2009;Prawira, 2015,Osman Faith Satacoglu and Eren Caskurlu, 2011; Fisher et.