Contending that around 30% to 40% of taxes are not being paid over, Tax Chief Godfrey Statia yesterday served notice that presumptive taxation will be employed to rope in professional who are avoiding their obligations and he also signalled a crackdown on smuggling while emphasising that all public officials must submit their returns.
He said that one primary focus will be establishing a presence at some porous border points where billions of taxes are lost annually due to the smuggling of fuel, cigarettes and alcohol.
But while much work will be done to help curb smuggling, the agency says that equally important would be ensuring individuals comply with the requirements of the law as it pertains to their taxes.
“We also know there is fuel smuggling in the Essequibo in Morawhanna, we also plan to put a presence at Morawhanna (Region One) and at Eteringbang (Region Seven),” Commissioner- General of the Guyana Revenue Authority (GRA) Statia told a press conference.
The Commissioner General announced plans for the agency as he fielded questions from reporters at an end-of-year press conference he held at the GRA Headquarters, Camp Street.
Pointing to revenues lost from smuggling, Statia said, “We have found that in the alcohol and cigarette industries alone, we have lost close to $2B a year in taxes smuggling and that is one the loopholes we will try to fix. We have also found that there has been intense smuggling in fuel… I sent a team up to the border town of Eteringbang and based on our initial findings we lose close to $20M on a weekly basis there.”
‘Taking advantage’
He noted that because most of the revenue comes from Demerara, the agency’s primary focus has been centred on big business in that area and self-employed persons and businesses in the outer regions took advantage of the system.
“There are persons, who in their own opinion, believe that even though they operate a business for years and never filed a tax return…when you write them, they say they have been making losses all the years. Well you know if you do not get enough you go bankrupt and yet they are operating for years and claim making losses. They do that, not only because they are abetted by others, but by some members of staff who prepare these accounts,” Statia said.
“When you check and see the compliance rate of self-employed compared to corporate entities and compare to employees on the whole, the compliance rate is less that 10 percent from self-employed persons. Income on self-employment activities have been going down, on a yearly basis, over the last few years. We have found that some companies recognize that some companies are not targeted by the GRA and have closed that corporate activity and gone back to self-employment. They changed their status. We have to look at the regional offices. We have centred most of our activities in Georgetown, on head office, forgetting that Guyana is a whole. That is why in 2017, we are going to emphasize a lot more enforcement, collection and audit activities in the regions themselves,” he added.
Statia said that he believes that taxpayers have been utilizing the weaknesses in the country’s tax system and in the regions there are some businesses… who refuse to give their accounting books to GRA staff. “These are some of the issues we face. Until we are in a position to enforce these measures there will continue to be a lack of regard and respect for the tax office and that is what we are trying to institute, some respectability for the tax office,” he noted.
The GRA Head estimates that between 30 to 40 percent of taxes are not paid annually with some getting help to manipulate their accounting books from GRA officers.
“We know that if everybody pay their fair share of taxation once you widen the tax base, tax rates ought to be reduced. One of our problems is that people have not been paying their rightful taxes. And sometimes in collusion with our unscrupulous officers we intend to minimize that collusion. I will not tolerate corruption and collusion,
As far as I am aware…it is close to 30-40% of the taxes that are not paid. If everyone pays their rightful taxes certainly there will be a broadening of the base…our taxes will go down. He said that the GRA’s internal data base sharing has had its own shortfalls and the agency is working to ensure that by 2018 all taxing departments are interlinked and as such can quickly pick up tax defaulters either through income, licence or other taxes.
“The TRIPS (Total Revenue Integrated Processing) System is not as it is supposed to be and we intend to fix that in 2017 so that there be information sharing across the board so that there can be better enforcement and better collection of taxes,” he said.
‘No political interference’
Statia rubbished claims by the Opposition Leader Bharrat Jagdeo that members of the PPP/C have been politically targeted because they received property tax notices during this week’s parliamentary debates.
Jagdeo alleged victimization after five of his party’s Members of Parliament were served with letters regarding property tax.
At a press conference, the Opposition Leader had said that the budget debate was not even completed when the letters were served and suspects that it was because of vindictiveness of the government or Minister of Finance, Winston Jordan.
According to him, five of the PPP/C MPs; Frank Anthony, Indra Chandarpal, Irfaan Ali, Joe Hamilton and Juan Edghill received the letters on Wednesday night and Thursday morning.
Responding to a question about whether it was reasonable for the GRA to notify public office holders if they default on property taxes, Jagdeo said the timing for doing so was bad.
He reiterated that it was “in the middle of the debate, especially after Jordan had such a rough time in parliament” that the MPs got the letters. He said it has been the pattern that every time they mount some criticism of the government or expose corruption, the government says “we going to come after you.”
Statia said that the letters should have been received since August.
“We are here to administer the law fairly and without political intervention. As far as I am aware, we have had no political intervention so far, no one has spoken to me about it. I would like to assure the Opposition Leader that if there was any targeting it would not be for those five persons because I am sure those five persons is a drop in bucket. But we need to understand, that we have an obligation and public officers, MPs or whoever, have an obligation, to file their taxes on or before April 30th the following year,” he stressed.
“As for targeting? I do not know, but I will tell you plain and straight that unfortunately it may have reached them at this time…when I ascended this office, and when I was going through the listing of all the persons that had to be sent notices, members of parliament across the board (were seen). We sent out notices to all members of parliament, all permanent secretaries, all government. Everybody at the top of government agencies, I instructed that they must, they must, submit all their outstanding returns.
I demanded that of them, because holding a public office you must be held to a certain standard and I am sure if the opposition had checked, they would have seen that certain notices would have reached them long before. Those five unfortunately…might have fallen through the cracks… If they received it during the budget debates they would have received it late, they should have gotten it since in August. ” he added.
‘Higher Standard’
Underscoring the need for every individual to submit their tax return while emphasing that public officials should lead by example and hold themselves to a higher standard, Statia said that he will continue to press for everyone to submit their returns.
“They have a duty, members of parliament, government ministers or not, they have a duty to file their whole correct tax returns on and before the following year. I can assure you it was not political. Nothing that was sent was political. So far I have not gotten any political direction. My minister has been hands off and has allowed me free reign. There has been no political direction.”
He said that some persons have not been accepting mails when they see it was from the GRA and as such he has now instructed that notices be sent minus sender information. “Over the past months people have been refusing mails once they see it has originated from the GRA so I have since instructed my staff not to put a return address,” he announced.
‘Presumptive taxation’
Professionals such as doctors and lawyers will also be under intense scrutiny this year as over the years they have not been paying their taxes. The GRA Head stated, “That has been a problem that the GRA has faced for a lengthy period of time. In most countries where there are professionals, they use what is called presumptive taxation where you are going to look at like trades and decide that you will tax them according to the trade they are in.”
Further, he added, “You also could use different measures and that is where (the) tax return comes in because it will tell you what was earned…We are putting things in place to actually do that next year to pull these professionals that have been evading tax to ensure they pay their rightful share in taxes. It is not rocket science to get them to pay it is the will and the resources I am sure that we did not have. Now we have the will we are looking for the resources to expect a change in approach for 2017.
