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PM unveils plans for $900m crackdown on large tax delinquents

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Prime Minister yesterday unveiled plans to crackdown on delinquent taxpayers owing a collective $900m by creating a unit to focus on the Government’s major revenue generators.

Philip Davis QC, presenting the mid-year Budget statement in the House of Assembly, revealed that the Department of Inland Revenue (DIR) was considering whether to follow other countries in establishing a Large Taxpayer Unit to focus on clients who both contribute the bulk of the Government’s revenues and pose the greatest non-compliance vulnerabilities.

“This is a significant reform as currently the Department has about $900m in outstanding taxes. The vast of majority of these taxes are owed by relatively small group of businesses,” the Prime Minister revealed.

“As is done in many other countries, and as is recommended in line with best practice, [the Department of] Inland Revenue is considering exploring the establishment of a Large Taxpayer Unit (LTU). This would effect better control of, and service to, those taxpayers who contribute the majority of tax revenues.”

The potential benefits, Mr Davis added, will involve “stabilising the collection of a large portion of national revenue collections, bringing predictability to revenue planning”, while enhancing compliance and improving quality of service for large taxpayers generating a significant portion of the Government’s income via VAT, import tariffs, property taxes and Business Licence fees.

Hubert Edwards, the Organisation for Responsible Governance’s (ORG) economic development chief, told Tribune Business he has “no problem in principle” with the creation of a Large Taxpayer Unit within the Department of Inland Revenue given the need to ensure all pay their fair share in taxes.

“I believe that any initiative that makes tax collection more efficient and complete is a good thing,” he added, “because obviously if a tax payable is owed and payable, then collection and enforcement has to be a part of that process. 

“To the extent an individual has a tax liability that is genuine and outstanding, they should pay, and if payment does not happen or they are significantly late one expects the Government will put in place a system and process to enhance collection.”

Mr Davis’ mid-year Budget statement gave an insight into the Government’s thinking as it seeks to boost compliance, enforcement and revenue administration in an effort to grow its income to a sum equal to 25 percent of gross domestic product (GDP) by 2025-2026 - a target that the Prime Minister himself yesterday admitted is “bold” and “aggressive”.

“The team at the Ministry of Finance, along with our international consultants, are continually exploring various revenue options that might be implemented if necessary,” he said. “There are several administrative reforms that the team has identified which will improve operational efficiencies and improve overall revenue collections.”

Besides the Large Taxpayer Unit, Mr Davis said the Government is also mulling whether to designate qualified businesses as VAT “withholding agents”. Such companies will be able to withhold the VAT payable to their suppliers and vendors on the invoices they receive, and instead directly remit due payment to the Government themselves.

It is a practice employed by other nations, and Mr Davis said: “To further strengthen VAT collections, the establishment of VAT withholding agents and the introduction of electronic fiscal devices (EFDs) is also recommended.

“As for the former option, legislation would be needed to appoint certain purchasers of goods and services as ‘VAT withholding agents’. They would be required to withhold the VAT amount when paying invoices from standard rate vendors, and remit that VAT directly to the Government on behalf of the vendor.”

The Prime Minister also confirmed that the Government is mulling whether to implement the long-talked-about idea, via legislation or agreements, for mortgage lenders to include real property tax payments in their borrower clients’ monthly repayments.

“Consideration could also be given to require that property taxes be included in the amortisation schedules of all mortgages, through both negotiated agreements with financial institutions, and via legislation,” Mr Davis said.

“The revenue impact could be significant as it would ensure the collection of real property tax revenues, and eliminate opportunities for non- payment by mortgage holders.... The Government is continuing, through data collection agreements, to exploit the use of big data techniques to detect tax evasion and avoidance.

“For instance, the Government already collects data on Airbnb rentals, which facilitates the identification of properties collecting revenue but not paying taxes. To build further on this initiative, Inland Revenue has engaged an international firm to provide data on a variety of online transactions.”

Then there is the need to build-up the Department of Inland Revenue’s expertise and human resources capacity. The Prime Minister added: “We must address the long-standing staffing challenges at the Department of Inland Revenue.

“Upon coming to office, we met the Department of Inland Revenue with 214 employees, of which only 52 were permanent and 49 seconded from other departments Fifty-four per cent of the officers were on contract, the vast majority of which have expired.

“The last person to hold the post of controller of the Department retired in 2017. Since then, no-one has been appointed to the post, or chosen to act in the capacity of controller. There have also been no appointments (even on an acting basis) to the posts of deputy or assistant controller.

“Since 2017, the Department had also experienced a very high turnover of staff resulting in the suspension of critical functions, such as audits. As a result the Department of Inland Revenue has performed poorly in ensuring that payments were submitted in a timely manner. Reforming the Department of Inland Revenue with adequate staffing is an absolute necessity.”

Comments

KapunkleUp 10 months, 3 weeks ago

Top of that list should be former and present MPs, and the usual big boys. That should settle at least half of the outstanding debt.

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Sickened 10 months, 3 weeks ago

Nope. He means the middle class. They are the easy target. Those other fellas are untouchable. They will drag the case through court and government will never be able to produce evidence that bills were not paid. As the government is the one filing the complaint they will have to prove that the bills weren't paid. And since their paper filing system has been destroyed or lost the judge will throw out the case. This country is a joke.

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KapunkleUp 10 months, 3 weeks ago

Yup. All those friends and family members of MPs. Also let's not forget campaign donors flying under the radar.

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One 10 months, 3 weeks ago

Those dudes are protected. As of last week, we have a new ambassador with the title "His Excellency" Sebas Bastian. Now he has diplomatic immunity.

Our country is a dump of absolute corruption. The good people are oppressed.

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tribanon 10 months, 3 weeks ago

Bahamian voters will remember this politically suicidal faux pas to be among Davis's greatest ever blunders. With that most disgusting and disgraceful appointment of a known criminal thug, Davis revealed he has no intention of seeking another five-year term and will most likely call an early election. This explains why the very ambitious Fweddy Boy Mitchell has recently been doing so much bashing of Alfred Sears behind his back. LOL

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TimesUp 10 months, 3 weeks ago

What do you bet that the "large taxpayer unit" will cost more to operate than it collects each year?

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tribanon 10 months, 3 weeks ago

Yup. The corrupt and grossly incompetent Davis and Cooper PLP administration only ever talks about growing the size of government and never about cutting all the fat out of it that's killing our country with each passing day.

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Emilio26 10 months, 3 weeks ago

Tribanon it sounds like everyone n your eyes are corrupt.

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One 10 months, 3 weeks ago

I wonder how long before they start closing the comment section of the Tribune. Don't want people freely sharing ideas about corruption

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TalRussell 10 months, 3 weeks ago

@ComradeOne, Youse have to give respect fairness duh Tribune's, allowing expressions such be they favourable or negative comments about either two mainstream political symbols, and even when its aimed directly at journalistic themselves, something that duh morning newspaper, nor talk radio stations, permits?   Keepin' along duh same in context, I must draw attention to Duh Revolution with Comrade Mr. Carmichael, who's too afraid to deny airspace to Russian Putin's planes but had no hesitation be blocking show's listeners' most favourite caller, Comrade Sparky accusing him havin' his own political agenda,**  ― Yes?

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ABOMINATION 10 months, 3 weeks ago

"One" is absolutely correct. The likes of a Thug who had all is Dirty money legalized by Per r y Christie, without even seeing a Court Room! Criminal and disgusting! Perry should be held liable and should face prosecution because he went against the People's Vote. We are giving positions to people with no morals or integrity, no values, with 10 baby mammas, and another on the way....No wonder the country gets no where, Because of PBDavis can become a PM, any and all of his thugs and hired #5$$ . ANd where is the outcry from the majority on this appointment? Oh I know, some of these voters love corruption, and love money, and because he made money from the fools, and he gave them a fraction back through the occasional win, they worship him...why dont these same gamblers go and see his palatial estate Ocean Estates, and then go back and look at their leaning over homes, with no running water, and no money to buy food. We are dismal, this country! Stand up people for what is right.

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