Finance Minister, Winston Jordan yesterday said that a fair tax system and one that goes after evasion is what his government is expecting as a result of a review recently established.
In closing the budget debate on Saturday, Jordan announced that a comprehensive review would be done by a committee of experts and he expanded on this yesterday in an interview with GINA.
After meeting with the team, Jordan said that its Terms of Reference (TOR) include;
– To Investigate and inquire into the state of taxation
– To review taxes with a view to achieving a number of objectives such as reallocation
– To look at the administration of taxes with a view to bring about efficiency, rationalization etc.
The committee is chaired by economist Dr Maurice Odle and includes Christopher Ram, Godfrey Statia and Dr Thomas Singh.
The minister told GINA “We are aiming to look after all taxes, their structure, their functions, objectives, equity, incidence and fairness and essentially how these taxes are administered because that’s a major issue. I want tax payers to feel that they can pay taxes because they have a friendly tax service. We want a system that is fair and firm and it doesn’t exempt friends of the Government, friends of the tax commissioner, it should be seen by all as fair as it is applied all across the board and it has a rigorous legal system in place that can go after tax dodgers, tax cheats”.
GINA said that the committee has until December 2015 to produce an interim report from which provisions/announcements may be made in the 2016 national budget.
According to the minister, the committee will not only be looking at how to lower the Value Added Tax (VAT) but will also be examining all taxes with a view of relieving the burden on the population.
“We are going to do tax administration and taxation in a systemic way, inform-ed by evidence … so this committee represents the first step in doing that,” Jordan said.
Referring to the reduction of VAT as was listed in the APNU+AFC 100 Day Plan, the Minister said that while the Plan did address reducing VAT it was found that it could not be done immediately. “It would have been highly irresponsible for us to just come in, take a major tax category like VAT and just proceed to reduce it in the hope that it would meet some objective or criteria earlier stated,” Jordan said, reiterating earlier sentiments.
Jordan added that should this study come out and advise that VAT cannot be revised at this stage, then it would be an ‘informed study’, or if the report recommends that VAT be reduced by some percentage point or be reduced gradually the Government will examine that with a view to implementation.
Referring to other taxes collected by the Guyana Revenue Authority (GRA), Jordan said that there are a number of other taxes but some of them may have outgrown their usefulness.
“In some cases these taxes are costing you more to administer than to collect. Some of those fees are like that, they are administrative and legislative than a revenue raising measure so some of them will remain”, he said.
Jordan adverted to the tax exemption on dividends which was done mainly to encourage savings and also encourage movements on the stock exchange.
“When we started the stock exchange, Guyana was a very small market so we were going to encourage (Companies) to go public and therefore that’s why dividends of public companies are tax exempted but, over time you have to look and see whether that has achieved its objectives,” Jordan stated.
Chairman of the Committee, Dr Odle, said that the assignment is a very challenging one. “We have to produce by the end of this year, but we are hopeful and confident that we can deliver a meaningful product. We would like the tax system to be productive and the burden to be fair on the population,” he told GINA.
Technical support for the team will be provided by staff of the Ministry of Finance as the team will be functioning primarily from that Ministry.
The team will also travel where necessary to engage in consultations during this process. As explained by the Minister, consultations are expected to be held with various bodies. GINA said that mention was made of the Private Sector Commission, the Georgetown Chamber of Commerce and Industry, the Public Utilities Com-mission, banking and other institutions.
The team will consult with other stakeholders. Individuals are also encouraged to make presentations to the committee as the business hours, and operational procedures of the committee will be publicly advertised, GINA said.
Jordan added that the ultimate goal is the creation of a tax system that is transparent and predictable. “We must be able to sell Guyana as an attractive place because this is the tax system and these are the tax allowances we giving an so forth…we really want people both local and foreign to feel that they are being treated fairly and equally from a tax system,” he said.
A number of tax studies have been done over the years and some of these were partially implemented. The 2011 administration of former President Donald Ramotar had promised to undertake a tax study but this didn’t get off the ground.
In December, 2011, the president identified chartered accountant Ronald Alli, economist Dr Cyril Solomon and businessman Clifford Reis to be members of a panel to review the taxation system.
