Delinquent taxpayers to be targeted – Finance Minister

Georgetown: Finance Minister Winston Jordan said Government will be seeking avenues to target delinquent taxpayers.
He was at the time presenting Budget 2016 recently in the National Assembly. According to Jordan, it has been observed that the country’s tax structure is yielding uneven amounts of revenue; an issue that continues to place economic strain on the country’s financial system.
“The numbers suggest that there is a large population of delinquent taxpayers out there, prominent among whom are the self-employed and persons paying contributors’ tax. We are concerned about the failure of both categories to pay their fair share of taxes “he noted.
He said Government 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”, he reasoned.
He said once the evaluations are completed, there should be a determination of 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.
According to him, a simple analysis of tax collections has shown that only three parts of the tax structure are contributing meaningfully to government revenues. They are: income tax, production and consumption taxes, and import duties.
“It is with the need to remedy this situation of revenue leakage that the GRA is being asked to undertake a sensitisation and awareness exercise in order to help taxpayers to fulfil their obligations”, he said
He said Government is aware that to achieve its goals, it must have the revenues to spend.
“As an independent nation, we must first look to ourselves to find the money to develop our country. Admittedly, we were able to achieve the revenue targets that were set over the years. We know from this experience that we have the ability to achieve realistic revenue targets using the tax structure and tax rates that we have currently.”
He said countries tend to focus on the relationship with foreign investors or large investors to support their shift of resources from those home countries to theirs, however it was important that “we add capacity to our production structure.
We do this by offering tax exemptions and tax holidays with the hope of achieving a net gain in tax revenues. But in a study done in the mid-2000s, it was observed that small businesses make up approximately half of the Guyana economy. These investors, small as they might be, can transfer resources from consumption to investment. In this way, they too can help add capacity to our production structure and expand economic opportunity”, he said
Only late last month, Chairman of the Governing board of the Guyana Revenue Authority (GRA) Rawle Lucas said that when communities fail to produce the revenues that reflect their observed level of economic activity, the GRA would have to use its enforcement authority.
According to him, the board examined economic data over the period 2006 to 2014 to establish some preliminary estimates of the tax base. The methodology used relied on that used by the Bank of Guyana to realise the resource gap and get a true sense of the resource shortfall.
“The question that arose from the numbers that emerged was how we can spend so much from so little money. We looked in the usual places like borrowing, remittances from abroad and foreign investments and aid.” The reconciling items could not reconcile our spending,” he said.
According to Lucas, the methodology confirmed that the tax base was ill defined and distorted and in need of urgent refining:
“Consequently, another of our goals this year, is to give accurate measurement of our tax base for future tax planning; further an inaccurate tax base can lead to revenue loss, as revenue leaks through the various tax structures”.
The ones that are of greater concern, the chairman said, are the losses from self-employed income tax, property tax, value added taxes and import duties.
He said one of the troubling things seen so far, is the relationship between the total number of registered tax payers and those who are actually paying tax.