Government is facing a guava season and needs the increase in tax revenues that is expected from the creation of the Trinidad and Tobago Revenue Authority (TTRA).
Piloting the TTRA bill in the Senate yesterday, at the Red House, Port of Spain, Finance Minister Colm Imbert said: “This is really needed at this point in time with our very difficult revenue situation and the call on the Treasury for unprecedented expenditure on the health sector, in terms of dealing with the Covid-19 pandemic and other calls on the Treasury, in terms of providing financial assistance to those affected and so on.
“I don’t think we can continue in the current situation. I think that is well recognised by the majority of national people that we cannot continue with our current highly and grossly inefficient system, which lends itself to interference and to a culture of tax avoidance and which punishes those members of the T&T population who are conscientious, who pay their taxes and who comply with the Customs laws,” he said.
“We have found a solution which we believe is workable, and we believe that we can press on and get on with this most important task of establishing a Revenue Authority. And we believe that there would be tremendous improvement in efficiency, taxpayers will not have to wait in long lines to pay their taxes and will not be subject to frustration, in terms of getting information and clarification, in terms of getting feedback.”
He said the country “will benefit, in terms of compliance, a number of persons who are currently avoiding taxes, not paying tax, outside of the tax net, but enjoying the service of T&T by way of parliamentary appropriations, would be captured. And it would assist us, especially in this guava season, where our revenues are significantly damaged by the global pandemic.”
Imbert: Bill changed to allow simple majority
The minister said Government had made adjustments to the bill (which was first laid in the Parliament in early 2010 during the Manning administration), so it would not require a special majority.
“In order to avoid any further wastage of time, we have been at this for 11 years, the Government proposes a solution to end this deadlock that is seamless and in keeping with the rule of law....Because the Opposition has made it crystal clear that we could pass whatever we want in the Senate with the support of the Independents, but when it gets to the House (of Representatives), they (the Opposition) will use their numbers to ensure that such legislation is torpedoed, we have decided to make an adjustment which allows us to pass the legislation with a single majority,” he said.
“This has been done by establishing an Enforcement Division of the TTRA, whose purpose is to exercise enforcement powers, excepting the enforcement of revenue laws by way of civil proceedings found under the revenue laws, by a cadre of public officers appointed by the Public Service Commission (PSC).”
The Finance Minister said public servants will have several options:
1. Voluntary retirement
2. Transfer to the Revenue Authority
3. Be appointed on transfer by the PSC to a suitable office in the enforcement division
4. Remain in the Public Service.
He said except for one policy change, the bill was virtually identical to the previous (2019) bill.
Appointment to the top positions will be done by notification, subject to affirmative resolution of Parliament.
“If you know anything about persons who are recommended or nominated for appointment to these offices—Director General and Deputy Director General—then that can be well ventilated when these matters come,” he said.
Imbert said the Deputy Director General would be the head of the enforcement division and would be a public officer appointed by the PSC, not by the minister or any other politician or the Cabinet. He will hold office until retirement once appointed and will be subject to the control of the PSC.
The Director General, who will not be appointed by the PSC, will enforce revenue laws only by way of civil proceedings—he must go to the court, Imbert said.
Imbert: No ministerial
interference in TTRA \
He said the minister would not have the power to tell anyone in the TTRA who to tax or target, and the TTRA would be insulated from an errant minister.
Imbert said Government was satisfied that the creation of the enforcement division will create no departure from what currently obtains, and “we believe that that provides the necessary balance that maintains the rule of law”.
On the benefits of the TTRA, Imbert said it would facilitate vastly improved efficiencies of business for all, greater revenue collection and prudent management of the State’s main revenue collection agency.
He said a 2017 assessment of the Inland Revenue Division by the International Monetary Fund (IMF) showed that out of 28 high-level indicators, T&T received two A ratings, one B rating, seven C ratings and 18 D ratings, which was the lowest and worst rating. He said in 2019, an IMF-conducted VAT (value-added tax) gap study revealed a VAT gap of around five per cent of GDP (gross domestic product) in T&T.
The compliance gap, with respect to VAT alone, which is the difference between potential tax and net tax, was between two to three per cent or $3.5 billion.
T&T is ranked 160 out of 190 countries in terms of paying taxes by the World Bank, he said.