The government will be moving to amend the tax laws to ensure greater compliance, particularly among the self-employed, from whom revenue collections continue to lag.
In his presentation on the 2016 national budget yesterday in the National Assembly, Finance Minister Winston Jordan said amendments to the Tax Act and the Customs Act are proposed to improve the efficiency of administering taxes by the Guyana Revenue Authority (GRA), which is expected to yield income tax compliance, especially among the self-employed, through greater enforcement.
Towards this end, Jordan said the Tax Act would be amended to ensure that prior to the issuance of all licences for public use, including licences to conduct forms of trade and business, the applicant has complied with his/her obligations to file annual returns and paid, or has made arrangements to pay, all taxes due and payable.
Also proposed is an amendment to the Customs Act to provide for the non-grant of exemptions to an applicant “unless all outstanding tax returns are filed in accordance with the Income Tax Act, and all taxes have been paid or satisfactory arrangements have been made to pay such taxes.”
During his presentation, Jordan noted that there continues to be “low compliance” by the self-employed, which he said is the reason why the category lags behind other areas of income tax collection.
“What we have noticed though is that our tax structure yields uneven amounts of revenue. The numbers suggest that there is a large population of delinquent taxpayers out there, prominent among whom are the self-employed and persons paying Tributors’ tax. We are concerned about the failure of both categories to pay their fair share of taxes,” he said, while noting that a simple analysis of tax collections has shown that only three parts of the tax structure are contributing meaningfully to government revenues: income tax, production and consumption taxes, and import duties.
In order to remedy the situation of “revenue leakage” and to help taxpayers to fulfill their obligations, he said the GRA is being asked to undertake a sensitisation and awareness exercises. “We will be encouraging GRA to intensify its efforts at undertaking evaluations of tax revenues by impact of exemptions, economic centres and economic sectors. The reason is to enable better targeting of those taxpayers who are not in compliance with the tax laws and to understand the reasons for non-compliance, so that we could help them to do better. Once the evaluations are completed, we would be able to determine the economic value of concessions to the country, align economic centres with geographic regions and gain a better understanding of which industries are not paying their fair share of taxes and why,” he noted.
GRA defines a self-employed person as any person who works for him/herself and is responsible for setting charges for goods or services offered. Examples include doctors, lawyers, beauticians, barbers, taxi-drivers, minibus owners and operators, farmers, hucksters and shop-keepers.
The Auditor General’s report of 2013 had noted that although there were 75,992 active self-employed persons in the country, only 33,740 filed taxes in 2013, accounting for $3.307B in taxes and penalties, which translates to an average of $98,000 per person.
It further said that the GRA only sent out 18,581 demand notices to the 43,252 individuals who did not file.
Current GRA Board Chairman Rawle Lucas has publicly said that while the self-employed pay taxes, the amount is minimal. “It is a large catchment of taxpayers who do not seem to pay their fair share of taxes. These taxpayers need to be sensitised about their obligations to file tax returns and to register with the GRA if they have not done so. While the tax base is broader than the revenue collected seems to suggest, it is clear that the income tax structure is unable to harness revenues from all the possible income sources,” he wrote in his Sunday Stabroek Business Page column last month.
Meanwhile, Jordan also addressed tax refunds during his presentation and acknowledged that the government is aware of the view of the taxpaying public “that once their money gets into the hands of the GRA, it is not coming back out.”
“This is the frustration that many taxpayers experience even after they might have been advised that they were entitled to a refund. This goes for those taxpayers who expect VAT and income tax refunds,” he said, while adding that the administration believes that where refunds are to be granted, the taxpayers must get them on time, unless there is good reason for the delay. “As an organisation that is seeking to build taxpayers’ compliance and confidence, GRA must change the way taxpayers feel about it,” he added.
