Prime Minister Ralph Gonsalves says too many taxpayers, including large and medium-sized taxpayers, “simply do not pay their taxes as required under the law”.
He said the situation exists even as the rate of compliance for Value Added Tax (VAT) is falling.
Gonsalves told a national address on Tuesday to mark the beginning of the New Year that some EC$200 million are owed in arrears of taxes, of all categories, and interest and penalties.
“Some big businesses, including a few with significant cross-border trading, do not pay all of their due taxes,” said Gonsalves, who is also Minister of Finance.
“Own-account businesses, including professionals, are notorious in not paying their fair share of taxes. In all of this, too, it is to be noted that the compliance rate for VAT is falling; a significant number of property-owners, including in certain geographical areas, are not paying property taxes; and many owners of motor vehicles are not paying their motor vehicle licences; these are also driving their vehicles uninsured,” Gonsalves said.
He urged the offending citizens and residents to make satisfactory arrangements with the Tax authorities to pay up their arrears in taxes and to keep current with their tax obligations.
“I am also demanding of the Tax Authorities to administer the tax laws with fairness and firmness. It is simply unfair that some persons get away from paying their due taxes while others have to carry the burden.”
He told the nation that the government cannot properly execute its “necessary and desirable programmes” if taxes are not being paid by so many persons.
Some employers not paying NIS
Gonsalves said that a similar complaint is being made about employers who do not pay over to the National Insurance Services (NIS) their own NIS contributions and those that they have deducted from their employees’ earnings.
“The NIS ought to get tough on such recalcitrant employers,” Gonsalves said.
“There are enough challenges and difficulties facing our small country for us to be making our lives more problematic with unproductive labour and management, mayhem on the roads, violent crimes, burglaries, theft of farmers’ commodities, and non-payment of due taxes and NIS contributions.
“The challenges from the global economy, the fall-out from international terrorism, and destructive natural disasters are added to the existing limitations of a small-island, developing country with its scarcity of material resources, and its abundant vulnerabilities. These external challenges we must meet successfully; but we make things more difficult for ourselves when we pile on internally-induced problems which we can easily avoid,” he said.
The figure of $EC 200 million is surely a lowball figure: probably when all tax evasion and penalties are added in for the past 10 years and working class people above the threshold are included, the figure has to be triple this amount.
One of the most distinctive economic feature of a Third World country, apart from low worker productivity, is the inability and/or unwillingness of the state to collect income and related taxes for political reasons, hence the crippling rates of import duties and various types of sales taxes, including VATs.
Any economist will tell you that that the fairest and least economically destructive way of taxing citizens is on their incomes. Taxing consumption, on the other hand, is a real job killer which disproportionately hurts the poor.
Rather than bellyaching about this all the time but doing little or nothing to collect these taxes, real action is needed but will not happen because too many highly placed ULP supporters and funders would be caught up in any widespread and impartial crackdown.
Why is there a much higher rate of tax compliance in, say, the United States? Because there are hundreds of rich and middle class people who have to pay huge fines and are sent to prison every year for long terms for tax evasion.
This is a real incentive for the majority to comply. In little SVG, this has never happened. Even drug dealers who end up in jail are never charged with income tax violations.
Prime Minister, put your excellent words into action or just shut up.
Government, the employer, must also deposit into the NIS fund, not only its matching portion but also the portion witheld from its employees’ gross earnings. There ought to be no extraordinary caveat for Government, the employer; it must lead transparently by example.
On top of all that and while on the subject, perhaps Government ought to extend itself and remind near-bank, indigenous financial institutions like credit unions that they ought to be discerning when it comes to advancing poor and hard-working peoples’ savings to bail out beleaguered, mismanaged entities that are on the brink. The prime minister is a poser.
I am appealing to the hard-working citizens of SVG, please pay up your taxes in all categories before the Finance Rodent cook up a scheme to get you. Business houses, it is against the law not to deliver your employees contribution to NIS. Remember the Finance Rodent broke that law big times…then turn around and milk the same NIS, NCB and the Lotto Board to the bone. Do so really don’t like so.
Anyhow, I am not condoning the wrongness of citizens not paying their taxes so please pay up as soon as the Finance Rodent create jobs, and agriculture ministry find market for produce. I am sure that jobs = money in pocket, the end result will be taxes paid = country progress.
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