Georgetown: The Guyana Government is implementing stronger measures to tackle tax evasion here, Finance Minister, Dr Ashni Singh told a regional conference of tax administrators.
Speaking at the opening ceremony of the Caribbean Organisation of Tax Administrators (COTA) 23rd General Assembly and Technical Conference at the Pegasus Hotel, Dr Singh said the issue is a worldwide one and he hopes participants at the conference come up with strong recommendations to tackle the scourge.
COTA’s five-day event, which will conclude on Friday, will tackle issues such as reforming tax/revenue administrations to meet the demand for higher fiscal revenues and gearing Caricom towards generating higher revenues and current issues in tax administration. The conference is being held under the theme “Efficient tax administration as a catalyst to growth and development in the Caribbean Community”.
A recent Inter-American Development Bank study had found that despite marked improvements in the tax administration in Latin America and the Caribbean, tax evasion remains widespread. In the study titled: “More Than Revenue: Taxation as a Development Tool”, the bank said tax collections have increased approximately 30 per cent for each dollar of output or income in Latin America and the Caribbean in the last 20 years. Most of this increase is due to improvements in tax administration. It said tax administrations now boast technical and budgetary autonomy and highly qualified professional staff, while their collection function, focusing on large taxpayers, has been strengthened, thanks in part to the widespread use of technology.
“However, the challenges facing tax administrations are greater than their achievements. A large number of workers and businesses in the region never have contact with the tax authority. Although some are exempt by law from filing tax returns, most simply hide from the tax administration through the use of avoidance strategies or directly illegal fraud,” the study found.
According to the IDB, half of the potential collection of individual and corporate income tax is lost through evasion, along with over a quarter of the tax revenues that VAT should raise. The bank said the main reason is the probability of being punished for tax evasion is virtually nil.
Meanwhile, Dr Singh told the gathering that there has been no time in regional history that this year’s theme has been more relevant. He stated that this conference provides the Caribbean Community with an opportunity to share experiences so that a change may occur.
Whether it is expected across the Caribbean, Minister Singh noted that there is a situation where a country’s own fiscal fragility is more evident and more stark now, than at any other time in living memory.
He noted that even the economies of the regions that have been historically regarded as more prosperous confront the challenges of being in serious debt that is inconsistent with a trajectory that would return us to debt sustainability.
According to the Minister, countries face the reality of slow economic growth, the need for significant fiscal intervention to stimulate growth at a time when there is no fiscal space to finance those interventions.
“Today, it is seen that more countries are returning to institutions like the International Monetary Fund (IMF) for structural adjustment programmes aimed at strengthening a country’s macro-economic situation, improving macroeconomic balances, and in particular, focusing on economic growth, but as a subset of that, debt and fiscal sustainability as prerequisites to sustainable growth.”
The Finance Minister stated that there has been medium-term policy papers that have spoken of achievements of debt sustainability in 20 years time, and in some of those policy papers there has been ambitious reforms articulated that may place many countries across the region under pressure to implement, if they want to achieve debt and fiscal sustainability in 20 years time.
He also noted that this is the reality across the Caribbean as countries want to make investments that are so crucial to improve quality of life for people and want to make investments that are so critical to catalyse entrenched sustained economic growth, upgrade infrastructure, improve social services, improve competitiveness of the business environments at a time when fiscal resources and fiscal space are scarce.
Caricom Representative Desiree Field-Ridley in her remarks to the Tax Administrators noted that the bi-annual event in is an occasion for joint-decision making.
She noted that this 23rd conference is occurring at a time when the Caribbean Community economy has not yet fully emerged from the global economic crisis, which has affected Caricom states more negatively than most developing countries, particularly, because of the underlying weaknesses in many Caribbean economies.
Field-Ridley stated that having recognised the significant need for structural change, Caricom Heads of Government has been focusing their attention on fashioning an appropriate growth agenda for the Caribbean Community, and the economy priority mandates, particularly for fiscal management, resource mobilisation and employment.
She stated that this year’s theme seeks to position tax administration in the centre of fiscal management and resource mobilisation drive, to support the much needed resurgent of economic growth in the economy, which requires both the public and private sectors.
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