Reseach Sobel, 2007; Osman Faith Satacoglu and Eren Caskurlu,

Reseach Question: How does
Tax Amnesty affect the Revenue Collection of the

Tax Administration of
Jamaica

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Reseach Question: How does
Tax Amnesty affect the Revenue Collection of the

Tax Administration of
Jamaica

Reseach Question: How does
Tax Amnesty affect the Revenue Collection of the

Tax Administration of
Jamaica

Reseach Question: How does
Tax Amnesty affect the Revenue Collection of the

Tax Administration of
Jamaica

Research Topic: How does Tax Amnesty
affect the Revenue Collection in Jamaica?

Tax
amnesty does have an impact on a country’s revenue, whether positively or
negatively.  Research shows that it can
positively impact revenue as it is an opportunity to capture taxpayers
operating under the radar, an opportunity in the long-term, as these negligent
taxpayers will be brought into the tax net and captured in the system going
forward. (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; Hari
Sharan 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 this
is an opportunity to retrieve money, owed to the country that would probably
never have been received in the absence of an amnesty. It is therefore a
short-term revenue generator as taxpayers tend to go back to their negligent
ways once the amnesty ends, taking advantage of this period where certain
sanctions and penalties are waived. Tax amnesties therefore might be most
impactful in the short-term. (Lutiel and Sobel, 2007; Alm et al, 2009).  For example Alm et al states that proponents
to the tax amnesties cite the short term revenue impact as justification for
this compliance strategy as individuals take advantage of the grace period to
pay unpaid taxes.

            It
should 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 be
very effective and structured to balance compliant and non-compliant taxpayers,
provide excellent services and law enforcements (Hari Sharan Luitel and Russell
Sobel, 2007; Pinaki Bose and Michael Jetter Alm et al, 2009; Prawira, 2015). 

 While there is a great possibility that tax
amnesties may positively impact a country’s revenue the downside is that there
might be a reduction in revenue in the long run.  It is said to create an expectation in
taxpayer’s mind that there will be another one in the future.  For example according to Mikesell, almost all
the total of tax payers who participates in the tax amnesties believes that tax
amnesties effects the repetition of the tax offences. As the tax amnesties generally
create favourable expectation for future taxpayers, are encouraged to evade.  Research shows that this expectation will then
allow negligent taxpayers to become relaxed waiting on a moment to arise to
take advantage of another amnesty (Ida Farida Adi Prawira, 2015; Pinaki Bose
and Michael Jetter).  This expectation
and dependency may lead to taxpayers, both dishonest and honest, to become
non-compliant, especially in the seasons before an amnesty and if the amnesty
becomes repetitive (John L. Mikesell and Justin M. Ross, 2012; Hari Sharan
Luitel and Russell Sobel, 2007; Osman Faith Satacoglu and Eren Caskurlu, 2011).  For example Alm et al questions whether
honest tax payers resent the special treatment being offered to the tax evaders
and consequently, in the long run compliance may decline. Mikesell and Ross
states that tax amnesty indirectly encourages delinquency, on-compliance and
evasion especially when it no longer a “one time offer” as collectors tend to
decline although the time period is typically lengthened.

Compliance
may also decrease as a result of loss of confidence in authority as tax
amnesties lead to the degrading of the authority’s creditability.  This system might also be seen as an unfair
avenue for taxpayers who are compliant (John L. Mikesell and Justin M. Ross,
2012; Hari Sharan Luitel and Russell Sobel, 2007, Lerman, 1986:326; Osman Faith
Satacoglu and Eren Caskurlu, 2011; James Alm, Jorge Martinez-Vazquez and Sally
Wallace, 2009) 

Robust
measures must be in place to reduce the negative impact of tax amnesties as it
relates to compliance. Increasing the level of education offered to taxpayers,
as to their responsibilities as well as a boost in audits after the amnesty
period with the introduction of stronger sanctions and penalties would be an
effective effort to combat those who use this period as an opportunity to evade
tax and become non-compliant. Alm.et. al, expressed the argument
that future tax compliance (and ensuing future tax revenues) may increase if
the amnesty is coupled with extensive public relations strategy at educating
the taxpayers towards improved responsibilities and the implementation of
stricter post-amnesty penalties for evaders. (Alm et al, 2009;
Prawira, 2015,Osman Faith Satacoglu and Eren Caskurlu, 2011; Fisher et. Al.,
1989:16).