The cream of the crop in society such as doctors, lawyers and insurance professionals have been identified as being among people including Carnival band producers, food vendors, taxi drivers, artistes and sportspeople who are the biggest tax dodgers in this country.
This was revealed yesterday by Minister in the Ministry of Finance Allyson West, who said these people are among those, “not fully compliant” when it comes to tax regulations but benefit from services provided by the State. She was the feature speaker at the American Chamber’s (AmCham) post-budget forum at the Trinidad Hilton, St Ann’s.
“We have wage earners who are relentlessly taxed by the week or month and who may be living from pay cheque to pay cheque. Meanwhile, there is a range of persons who make quite a good living, drive luxury cars and benefit from subsidies paid for by said (struggling) wage earners yet are not paying much by way of direct taxes. This is regressive and repressive,” she said.
West, a lawyer and former tax partner at PricewaterhouseCoopers, cited a preliminary study conducted by The UWI, which estimated the tax gap (difference between the amount identified and the amount actually collected) as being about $12 to $15 billion. Recovering even 68 percent of this shortfall by tax time, would result in an estimated revenue boost of $3.4 to $9 billion.
West noted that the current tax legislation does not distinguish between legal and illegal activity. “You can tax both. Once you are generating a profit, you are subject to tax. The challenge is identifying people. There’s nothing that prevents us from taxing the profit while we prosecute them for the illegal activity,” she said.
West said the Revenue Authority, once established, will go after non-compliant entities rather than increase taxes on the already compliant public, creating a transparent tax system which will motivate people to become compliant. She clarified that the reason government needs to form a Revenue Authority rather than just reform the existing Board of Inland Revenue is because the Board is part of the public service structure whose regulations are entrenched in the Constitution.
“The public service in general is not an agile organisation. You can’t just hire people. The chairman has to be appointed by the President. There are a lot of restrictions in respect to operating in the public service that do not allow for agility in management and operation.”
She noted that government is hoping to avoid a majority vote decision in Parliament in order to pass legislation to create the Revenue Authority. If that is impossible, government will have to rely on the support of the business community and the population to apply the necessary pressure on the Opposition.
AmCham president Mitchell de Silva assured West that despite anticipated resistance to the Revenue Authority, the group will do what is necessary to get the legislation passed as it understands the necessity of Authority.