NOTING that ‘tax reform’ and ‘tax evasion’ are separate and distinct issues, social activist Ramon Gaskin has called for the reduction — by two percentage points per annum — of Value Added Tax (VAT), the rate of which currently stands at 16 per cent, and for reforming of the local tax structure as ways to minimise tax evasion.Gaskin believes that the current administration needs to do more to ensure creation of a level playing field in relation to the tax system. Speaking with the Guyana Chronicle, he said: “This country is in need of serious tax reform.”

He noted that many persons are either delinquent, or don’t pay taxes at all. “The tax burden is not shared fairly among our people. A lot of businesspeople don’t pay, and they are the people who get all the duty-free, the tax-free, and concessions and all kinds of things. We need serious tax reform,” Gaskin contended.

He noted that tax reform should begin on the premise that tax rates are too high for all categories of persons. “This creates the urge to evade taxes,” he added.

The David Grange-led administration had appointed Guyanese economist Dr Maurice Odle and tax experts Christopher Ram, Godfrey Statia and Dr Thomas Singh to be part of the Tax Reform Committee aimed at investigating and inquiring into the state of taxation, reviewing the taxes, and looking at the administration of taxes with a view to bringing about efficiency.

All taxes — their structure, functions and objectives, along with their equity and fairness — were to be examined by the committee, headed by Dr Odle. This committee was required, at the end of December 2015, to submit to Finance Minister Winston Jordan an interim report aimed at guiding the 2016 budget. However, according to an article published in the January 14, 2016 edition of the Kaieteur News, headlined “VAT reduction unlikely to feature in 2016 budget”, the Tax Reform Committee is yet to submit its report.

According to Minister Jordan, the committee had been granted until the first week in January to submit its report, but that deadline was not met.

“I know that (the committee) had some difficulties in terms of meetings and timings, but I do not have a new date when they would be submitting the report. They have not come back to me with a new date. I was looking forward to it, and the intention was to start implementing at least some of their recommendations starting from this budget, but I can’t see it happening, because we are already in the second week in January,” the Finance Minister was quoted as saying in the KN article.

The Tax Reform Committee was established in August last year.

CARRY THROUGH
The foregoing notwithstanding, Gaskin thinks it is critical that the promise to lower VAT and reform the tax system are fulfilled by the current administration. “VAT is an unfair tax because it impacts the well-off and the poor people the same way: two points per annum. As the economy improves, we should lower VAT two points per annum,” he opined.

By strategically lowering VAT, Gaskin believes, the new administration would be demonstrating to the public that it is fulfilling an election promise.

“You are not going down to 10 per cent; you can’t afford to go to 10 per cent, but you could go to 14 per cent or 15 per cent, and next year you go to 13 per cent and the next year 12 per cent,” said the social activist.

Once VAT is lowered annually, based on the growth of the economy, Gaskin believes that “people will say ‘yes, these guys are working towards fulfilling this promise of lowering VAT’.”

While in opposition, President David Granger had contended that the 30 per cent Pay As You Earn (PAYE) tax, the 16 per cent VAT, and the heavy import duties for used vehicles severely oppress taxpayers, and he had promised to address those issues. He had given assurance that, with a new Tax Reform Commission in place, the income tax threshold would be increased, thereby resulting in a reduction of PAYE and VAT.

Gaskin believes the Guyana Revenue Authority has to aggressively tackle the issue of tax evasion across the country. The GRA, he said, needs to “go after delinquents and tax evaders.”

“We need to reform and aggressively go after delinquents and those who are avoiding and evading the tax system. We need a lot of tax accountants. A place like GRA, I would say, would need about 20 [tax accountants]. We need them in each region where you have businesses…they need to be a bit more aggressive. We need to get more people who could do the job…more professionally trained tax accountants,” he remarked.

Gaskin noted that the key to a sound taxation system is “lower rates and better enforcement,” as well as better policing. He said there are many businesses along Regent Street that do not charge VAT.

“We need also to look and see how we could reduce the burden of tax… It is ridiculous. This VAT thing is not creating a level playing field in the commercial sector. We have to look at that.”

“Get tough,” he urged GRA, as he emphasised the need to be fair but tough while executing duties. “The government depends on taxes to pay the expenses of the state. If we have a lower rate, everybody would be encouraged to pay their fair share, I think.”

Additionally, he believes that GRA needs to open more tax offices to ensure that there is enhanced policing of businesses.

By Ariana Gordon