GO AFTER THE PIRATES OF THE TREASURY!

Apr 06, 2012 Features / Columnists, Peeping Tom

Tax policy is made by politicians based on technical assistance provided by tax administrators. This technical assistance is merely to ensure that tax policy is consistent with and in compliance with the tax laws.
It is not the role of tax administrators to make policy. This is an executive prerogative. Similarly, when tax proposals are floated within the society, be it from political or civil society forces, there is no need for tax administrators, including the Commissioner-General of the Guyana Revenue Authority, to be giving any opinion on matters of tax policy.
The Commissioner-General ought to stay clear of such engagements. He has no place in such a discourse. Leave those who wish to suggest tax changes to do so.
His job is to comply with any tax policy that is made whether it is an increase or a reduction in the VAT, providing the law is not being broken.
His role is not to be responding to any proposal made. He may, of course, respond to criticism of his tax authority in terms of their management of the country’s tax laws.
In instances where such criticism emanates from an opposition political party and where there is a clear-cut political agenda, while the taxman has a right to defend his authority’s management, he would be better advised in these cases to stay clear of the political minefields and leave such responses to the politicians.
Recently it was reported that the head of the country’s tax department was claiming that a reduction in the Value Added Tax (VAT) was not going to benefit the ordinary worker earning below $50,000. The point being made, of course, is that already a wide range of items are zero-rated for cost of living purposes. As such, any reduction in VAT may not have an effect on the cost of living. Since most basic food items are already free of VAT, reducing the tax is not going to make much of an impact.
The fact that these very basic items are used by both the rich and the poor and while the zero-rating may have been intended to help the poor, it also helps the rich, and helps the rich more, since the rich would consume more of these items since they have a greater disposable income. It therefore makes no sense in this context to reduce the VAT, because it will benefit the rich more than the poor.
However, it is not fair to argue, as some may be wont to suggest, that reducing the VAT is not going to help the poor. It must be recalled that clothing and footwear which the poor still have to purchase also attract VAT and therefore any overall reduction will help a poor man somewhat, but will rebound more to the rich man who shops designer brands which are more costly.
Both the AFC and APNU have been calling for a reduction in VAT, but the government is not taking them seriously, because the government knows that these parties do not have a clue about what they are talking. They are responding to a false public perception that it was the introduction of the VAT that caused an increase in the cost of living.
It was unfortunate that when the VAT was introduced it coincided with the increase in global oil and commodity prices. Many in the business community also still do not understand how to price their goods to cater for the refund of their VAT.
While the Commissioner-General of the GRA is correct when he notes that there are a great deal of unscrupulous businessmen who duck the VAT by not issuing receipts to cooperating customers – the fact is that the greatest tax evasion is believed to originate by those who are stealing from the public coffers.
These persons who are luxuriating in mansions and living beyond their means should be investigated, because they have stolen from the public purse and enriched themselves beyond normal means. So while there is a case against unscrupulous businessmen and professionals who do not pay their fair share of taxes, there are also those who have milked the system and become rich beyond imagination.
This is where the taxman needs to be concentrating and it is within his power to do so. No politician can stop him from going after the pirates of the treasury. On that count he has free rein.

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GO AFTER THE PIRATES OF THE TREASURY!

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