NOT ALL BLACK AND WHITE: Guilty until proven innocent by BRA
THE ONE GOOD THING about the Dolittle Administration is that it is hopeless at implementation. That’s why I am not going to worry too much for now about the omnipotent taxman direction in which Minister of Finance Chris Sinckler seems to be taking the Barbados Revenue Authority (BRA), as he strives to ensure everybody pays their taxes.
In his Budget speech, the minister noted that some people just won’t pay their taxes, which he described as “a larger group of non-salaried or independent professionals who earn money from the practice of their profession or trade but simply refuse to pay tax or even register with the authorities”. To deal with them, he said, “I therefore propose that, effective immediately, all those individual professional operators provided for under the registration regime of the Profession, Trade, and Business Registration Act, shall be required to produce a valid tax clearance certificate from the BRA in order to renew their respective licences to practise in this jurisdiction.”
In this new dispensation, we may all end up guilty of non-payment of taxes until proven innocent.
Now, at the same time it is making work for the new BRA, pumping it up with all this new power, it is clearing the decks to allow it to focus on this laudable work by getting rid of time-wasting things like dealing with so many claims for VAT and personal income tax refunds.
You see, not only do those take up time that could be spent checking whether people and companies have paid their taxes, but they can end up with the government having to refund money (I mean theoretically, of course). The way out: Abolish most personal tax allowances and kick nearly half of all companies currently registered for VAT off the rolls, making them all pay more taxes in the end.
Mr Sinckler said that abolishing most of the remaining allowances and reducing the income tax rate marginally would make nearly two-thirds of all tax refund claims disappear.
By raising the VAT threshold to $300 000, according to the IMF report on the subject, half of the 6 000 companies currently registered for VAT would be de-registered but the Treasury would still get 96 per cent of all VAT currently paid in.
While I know we should all pay our taxes, there are cases of hardship, and there are genuine disputes. If, as it seems to me, the BRA gets to be judge and jury on your matter by simply not giving you a tax clearance certificate, then to me that is against the natural justice upon which this country is supposed to be built.
And to single out a sector like those engaged in hauling waste smacks of political payback. It shows that the potential for weaponisation of the BRA has not been lost on the administration.
The budget presented by the Minister of Finance was simply a stabilisation programme under a new guise: the administration is desperately trying to wring more taxes out of a system that has essentially peaked at around $2.5 billion.
Total revenue has not surpassed the $2 550 million achieved in fiscal 2011/12, the first full year with VAT at 17.5 per cent. At the end of the stabilisation programme in March it was still $50 million short.
Will these new taxes change the numbers by $200 million in the coming years? I personally doubt it. Just think Skype, WhatsApp and Vyber re. mobile phone time.
As for corporations, if they can’t transfer their losses, they are more likely to just shut down the loss-maker rather than try to persevere with it.
And as for the VAT-free basket of goods getting smaller, who can afford to eat anyway?
Patrick Hoyos is a journalist and publisher specialising in business.