MINISTER in the Ministry of Finance, Senator Allyson West, said yesterday some $11 billion was reported as due, but uncollected, by the Inland Revenue Division in its last two annual reports.
Speaking during debate on The Trinidad and Tobago Revenue Authority Bill, 2021 in the Senate, West again defended the need for the authority, saying Government remained under pressure to deliver while also losing billions in revenue.
West said the last two annual reports from the Board of Inland Revenue that she has seen included an “arrears of income” report, stating that $11 billion was due but uncollected.
She said the country was “at the bottom” in effective tax collection among several Caricom countries including Guyana, and noted the economic pressure brought to bear on the Government by the Covid-19 pandemic which arrived in Trinidad and Tobago in March 2020.
West said it could be agreed that “nobody wants to pay taxes but many of us demand a range of better and improved services from the Government”.
She cited public health, national security, transport, social security and Carnival among the Government’s expenses. Additionally, West said the State had to pay as much as possible into the Heritage and Stabilisation Fund (HSF), which had to be allowed to mature as intended and act as added protection for future generations.
Increasing tax rates would likely result in a greater burden on those who are already compliant, she said, whereas “the other option is to collect the right amount from everybody when due”.
A number of studies have identified “significant gaps” in tax collection, she said, noting one report by The University of the West Indies that the tax gap “on the income side” was into millions of dollars in the “double digits”.
West said VAT had worked well when it ran parallel to the BIR but after being joined, VAT has absorbed weaknesses from the latter system.
The Government currently owes millions in VAT refunds and West noted that a well-functioning authority would prevent this reoccurring.
She said the pandemic demonstrated that T&T needs to make itself “more liquid”.
“The strain on the budget is astronomical,” West said, adding that the pandemic expenses were “unplanned and uncatered for”.
Revenue sources, gaps
West listed among Government’s sources of revenue loans, taxes and the HSF.
However, continued borrowing has driven this country’s loans interest debts to 20 per cent of its expenditure, she said.
She said reports by foreign consultants hired by the previous government had shown significant energy tax gaps and the system was now being fixed according to the “three Es”—effectiveness, equity and efficiency.
West said there were more than 60 revenue authorities around the world and three within Caricom.
Looking at neighbouring jurisdictions in comparison to T&T’s tax collection as a percentage of the Gross Domestic Product (GDP), West said the situation here was “appalling”.
She cited revenue authorities in Guyana, Barbados and Jamaica and said “we are at the bottom of the list”.
In 2017, taxes accounted for 31.8 per cent of Barbados’ GDP, she said.
Guyana’s tax revenue also increased from 2016 to 2019- jumping from $151 billion to $225 billion.
T&T, however, reported a “disappointing” 22.2 per cent for that year, she said.
West said a Guyanese government official had indicated that the revenue increase was due largely to the implementation of an authority and not the country’s increased economic activity.
West addressed continued concerns about access to taxpayer information by the board of the proposed authority.
She said the legislation was clear that the authority would be structured so that the board’s role was to monitor management policy.
West said the board has no access to documents on legal matters or on individuals and is “clearly divorced” from the tax administration operations, which “remains the sole purview of the technical officers”.