'Slow Ramp Up': Tax Cheat Combat Unit Collects First $15m


Marlon Johnson


Tribune Business Editor


The Ministry of Finance's top official yesterday said the government had expected a "slow ramp up" by its tax compliance enforcers after the unit collected just $15m in the 2019-2020 first half.

Marlon Johnson, the acting financial secretary, nevertheless told Tribune Business that the Revenue Enhancement Unit (REU) was "making its mark" as it continues to add personnel to lead the crackdown on tax cheats and dodgers.

He argued that the unit had already achieved a psychological effect by making its presence felt on the ground, as the Department of Inland Revenue (DIR) was already fielding increased inquiries from companies and entrepreneurs seeking to ensure they were properly registered to pay VAT and other taxes.

Still, many are likely to compare the latest Revenue Enhancement Unit's impact with that of its predecessor which, according to a Moody's report, had yielded collected some $90m in revenues during its first six months in existence.

If correct, this meant the Christie administration's version was collecting $15m a month, not $15m every six months, putting it on target then to generate $180m in extra annual income for the Public Treasury. However, the first unit was disbanded by the Minnis administration on the basis that its creation had not been enshrined in law or a formal Cabinet conclusion.

With no legal basis for its activities, the present government argued that the initial Revenue Enhancement Unit was "almost exclusively made-up" of expatriates sourced by the global management consultancy, McKinsey, to whom the Government was paying a fee of $1m per month from the revenue being collected.

Mr Johnson yesterday said the Government was getting closer to achieving its objective of a Revenue Enhancement Unit comprised entirely of Bahamian professionals, and added: "It is early days but we are pleased with the momentum. Some of these VAT auditors, some have experience in the private sector but not the public space, and they're being trained on the job.

"We knew there would be a slow ramp up, but they're making their mark. One of the things we've noticed with the Customs team on the investigative side, and the VAT audit side, is the spin-off effects because persons know the enforcement regime is much more obvious.

"As people talk in the community how the Customs team and the VAT auditors are going around, through awareness of that the compliance levels are also improving. People are coming in and wanting to set up VAT registration, get it done properly and operate within the parameters of the law. People are asking questions about it: The team has seen an uptick in that."

K Peter Turnquest, deputy prime minister, addressing the House of Assembly's in tabling the mid-year Budget performance, said: "By end-December 2019, the Revenue Enhancement Unit had collected just over $15m for the Public Treasury.

"Of this total, approximately $9.5m had been collected in real property tax receipts, while the remaining $5.5m represented VAT and Business Licence collections. During the same period, the Revenue Enhancement Unit identified an additional $31.2m in tax arrears, which will be pursued over the second half of the fiscal year.

"I am pleased to advise the Bahamian public that our revenue collection efforts are robust - and getting stronger. And it is happening largely with Bahamian led managers and Bahamian talent."

Mr Johnson confirmed that the latest Revenue Enhancement Unit only became fully operational this fiscal year, one year later than planned. The intention had been to have it functioning during the 2018-2019 fiscal year, but he added that while "persons were already working in that space" it was not completely established in time to meet the Government's original timeline.

However, Mr Turnquest said yesterday: 'The Revenue Enhancement Unit is now staffed with a total of 36 employees, 21 of which are Bahamian. This includes, but is not limited to, 14 auditors, three collection officers, 12 real property tax officers, and 5 VAT/Business Licence officers. This complement will expand by an additional seven employees in April 2020."

Elsewhere, the deputy prime minister added that the $7.2m initiative to modernise the New Providence real property tax rolls had collected data on almost 50,000 land parcels to-date. "

"With a staff complement of 45 local employees, approximately 50 percent of the data required to proceed to the second phase of the project has been collected," he said.

"In fact, data has been collected on nearly 50,000 parcels stretching over 330 neighbourhoods, including nearly 39,000 residential or owner-occupied homes, over 2,400 commercial spaces and over 8,800 vacant lots.

"As a result, over 500 new properties were added to the tax role as of October 2019, with more to come once phase one has completed its life span of approximately two years."


BONEFISH 3 months ago

It does not surprise me at all.Just reinventing the wheel.All of the projects he is just babbling about were started by the previous financial secretary.The Revenue enhancement unit was working quite well.I was told by somebody in 2018 that unit which he disbanded, had to be restarted. A big time FNM supporter said to me ,he does not know what is doing. All he is , a next one of Dr.Minnis's political payoffs.


themessenger 3 months ago

So we're paying an ex-pat consultant one million per month to measure properties and collect tax revenues? We don't have Bahamians qualified to do that??

We Third World forever!!


bogart 3 months ago

Govt has already earlier relations with Mckinsey on a Report on the Bank of the Bahamas,...never revealed....and Govt has also Report be professional Marlette on the Bank of the Bahamas a few years ago which paid by TAXpayers .....was never revealed..!!!!!...country cycle is to have political syndicate identify the egregious wrongs by other party syndicate promises change does nothing when elected... and other group does cycle again.


bogart 3 months ago

The global Management years ago got in on the Bank of the Bahsmas with all the politicians and loans and no Report got out....And now global Mckinsey getting in by same govt officials back then govt NOW looking etc fot tax cheats and dodgers...????


bogart 3 months ago

Why would they referfing to people as tax cheats and dodgers?

Compared to Govt with hundreds of millions in cost overruns plain wastages...one big hole half a mountain in Palmetto boight and then graded down etcetc,, govt owing people and businesses money, govt wasting money on govt projects with blueprints, experts officials professionals learned highly educated paid for salaries by public begs the question what are those govt officials wasting peoples money need to be called???

Many of these so called tax cheats are in situations like loss of employment, financial hardship, govt owing people money, businesses unable to pay bills and closing, and near future because of anticipated financial hardships like Covid 19 economic effects many will be delinquent. In these present day public known situations. What seems to happen is that Mr. Johnson needs to arrange payment plans to get money back rather than to whip people into submission as seems current processes to get money from people to cover up acts spendings with no transparencies no FOIA on their govt wastages.


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