…GRA to set up outposts at Eteringbang, Mabaruma

DETERMINED to stamp out smuggling, the Guyana Revenue Authority (GRA) will establish offices in Mabaruma and Eteringbang, Finance Minister Winston Jordan announced in his budget presentation on Monday.

Fuel smuggling and other contraband trade have been rampant in these areas and government has estimated revenue losses in the millions. Jordan told the House that government is not only working to improve the service delivery to large taxpayers, but also to all others, noting that in 2017, the GRA established an outpost in Morawhanna, which reduced revenue leakage that was due to fuel smuggling. Additionally, offices have been established in Charity and Parika that offer a level of service similar to that of the Head Office. “In the coming year, the Authority will seek to establish additional offices in Mabaruma and Eteringbang,” the finance minister said.

He said another initiative which government anticipates will result in improved tax compliance, is the implementation of the excise stamp system for the sale of alcohol and tobacco. Through the use of seals to signal customs compliance, this measure will also help to reduce the incidence of smuggling of these particular goods.

Jordan said in anticipation of the economic development expected in the next few years, the country’s capacity for effective tax administration must be brought up to par, “If we are to continue to be fiscally responsible.” He said with the aim of strategically bolstering the capacity of the GRA, a five-year strategic plan will be developed in 2018, which will prioritise actions to be taken by the authority to maximise government revenue and improve the overall administration of taxes.

“In 2017, Government requested the conduct of a Tax Administration Diagnostic Assessment Tool to assess the effectiveness of the tax administration system. The findings of the report indicate that there is much work to be done. One recommendation from this report has led to the establishment of a Large Taxpayers Unit, in light of the fact that the majority of revenues are collected from a small group of taxpayers.

The operationalisation of the Unit is expected to improve service delivery, thereby increasing compliance and revenue collection. It is anticipated that, in 2018, the Unit will improve its operational capacity to service all 243 large taxpayers on its roll.”

“Mr Speaker, efforts will continue to focus on improving the internal capacities of the GRA to better serve the taxpayer. The GRA e-services are currently being tested for tax returns processing, and taxpayer registration. We anticipate that these e-services will be launched in time for at least the average taxpayer to file his or her tax return online by April 30th, 2018. In addition, in the new year, we will begin testing the Automated System for Customs Data (ASYCUDA), an integrated customs management system.

We will launch the testing of the manifest module of ASYCUDA with a private sector company, which will allow for advance filing of cargo declarations. This is intended to improve customs processing times and accelerate the clearance and release of shipments to taxpayers. By the end of 2018, it is expected that this module of ASYCUDA should go live.”

Jordan said from 2018, emphasis will be placed on refocusing and strengthening risk management, the re-establishment of a business information technology steering group, implementing a data warehouse, rapid cleansing of the taxpayer register, and developing and implementing a risk-based debt management strategy. All of these reforms he said are intended to stabilise the tax base, allowing for more predictability with regards to revenue streams, and more evidenced-based planning and forecasting.

Derisking
Touching on the issue of derisking, which resulted in foreign-owned banks terminating correspondent banking relationships with locally-owned banks, Jordan said this continues to affect the economy. He noted that at the end of October, 2017, more than two-thirds of the locally owned banks were unable to facilitate third-party foreign currency cheques, and only one bank has been executing wire transfers.

“This has led to increased cost of financial transactions which has the potential to reduce trade and investments, as well as remittances from abroad. We continue to work with our Caribbean neighbours and international institutions to develop a methodology to facilitate analysis of the impacts of these lost relationships, as well as to inform measures that can be put in place to mitigate against future losses.

The finance minister said throughout the year, the Bank of Guyana continued to develop systems to improve Guyana’s ability to monitor and maintain the stability of the financial sector. Central to this, he said, has been the drafting of amendments to the Financial Institutions Act (1995), which address the findings of the 2016 IMF and World Bank Financial Sector Assessment Programme (FSAP) of Guyana.

These amendments, he said, aim to address risks by enhancing the supervisory capacity of the BOG and enforcing monitoring, prevention, and correction measures. “This exercise benefited from technical assistance, which also enabled the drafting of Financial Consumer Protection legislation, for which consultations are expected to be held during 2018. When enacted, it will provide for a grievance mechanism to be established to receive and investigate civil complaints against financial institutions.”

Additionally, Jordan said critical to financial sector stability, is the continued enhancement of the risk-based supervisory (RBS) framework of the BOG, to adapt to changing supervisory methodology and best practices. He said the current framework has been in existence for over a decade.

Jordan told the House that government is cognisant that financial sector development is pivotal for sustained economic growth and development. Some of the core policy initiatives that were implemented within the financial sector over the past year were: measures to promote capital market development, and measures to enhance financial market infrastructure. The overarching goal of these initiatives is to create a more competitive financial environment, enhance financial stability, and fulfill the government‘s financial inclusion imperative.

Jordan said the design of a country‘s payment system has financial risk implications for the development, safety and soundness of the domestic financial system and the performance of the macro economy. These risks need to be managed and mitigated through the establishment of a modern payments infrastructure that is supported by a sound institutional and regulatory framework.

This evolution of our NPS, from paper-based to electronic, is underway. The Bank of Guyana has commenced work on the National Strategy for the Payments System Reform, which will serve to guide the development of the NPS. Specifically, in 2018, the Strategy is expected to be completed and compilation of the technical specifications of the required infrastructural upgrades will be underway. Once operationalised, the NPS is expected to handle a turnover of approximately 120 percent of Guyana‘s GDP.