Tax evasion more rampant than ever

Nov 09, 2013 News

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– The immorality of Guyana is that one set of people pays the tax while another spends it- Christopher Ram

By Kiana Wilburg
The debate over tax evasion, particularly by the wealthy, has once again been brought to the table by Chartered accountant Christopher Ram and economist Dr. Clive Thomas.
The duo believes that this illegal practice is more rampant than ever today, even in the face of the “sheepish” attempts by the government to reform Guyana’s Tax system.

Tax evasion is the method of illegally avoiding taxes one owes and on an aggregate basis, hampers governmental efficiency.
Ram on his website (http://www.chrisram.net) referred to taxation as a major tool of economic management and if properly used, it can play a significant role in fixing prices, allocating resources and alleviating social problems by redistribution of income.
However, in Guyana’s case, he noted that serious misallocations and distortions were allowed to develop because of poor fiscal and monetary management.
Ram, based on his interaction and experience, said that there are genuine efforts to deal with the misallocations. “But one has to wonder why, like in the drug trade, only the small fish ever get caught.”
He added, “In Guyana, there is one law for the rich, the powerful and the connected and another for the poor, the voiceless and the helpless. The immorality of Guyana is that one set of people pays the tax while another spends it.”
Dr. Thomas who also spoke on the issue at length, said in a published article that, “Today, the tax system is fractured and far too costly, burdensome, and inefficient.”
Ram explained that common examples of tax evasion include a deliberate failure by a business to report the full amount of revenue received or the deliberate claiming of a deduction by a business for an expenditure it has neither incurred nor paid.
Paying tax is supposed to be seen by citizens as contributing to the development of their country. However, this is not so, as artful tax dodgers who continue to cheat the system or are allowed to slip through the preferential doors, continue to hold faithful taxpayers hostage.
Furthermore, the government on its competitiveness website: competitiveness.org.gy stated that since the early 1990s, Guyana’s Tax system has undergone a series of reforms aimed at stimulating investment.
In 2000, the government established the Guyana Revenue Authority (GRA) to lead the implementation of the accelerated programme.
The most important recent reforms that were implemented or are in the pipeline are several which include, the Value Added Tax (VAT) and Excise Tax.
Even in the face of the aforementioned, Ram contended that tax reform in our case has first to deal with tax evasion and administration.
Ram said, “This government has been paying lip service to tax reform ever since it came to power…. Unless it thinks that imposing VAT on top of high personal tax rates is tax reform, it has done nothing and tax evasion is now worse than it has ever been.
“VAT has brought in immoral windfalls, reducing the incentive for reform which the Government has delegated to the National Competitiveness Strategy. So far, that body which is chaired by the President has shown no intention, appetite or capacity to deal with it. And the GRA is either overwhelmed by the level and scale of tax evasion or is not utilizing the tools and deploying the resources at its disposal to deal with the crisis.”
The accountant added, “While laws exist for dealing with tax evasion; resources available to the revenue authority are clearly inadequate to deal with the apparent scale of this practice.”
It is not a matter of laws or penalties, he said, for these are already “extremely severe.”
“The administrative capability to deal with this crisis must be enhanced by better staffing, training and salaries.”
Dr. Thomas explained that the sure way to overcome tax evasion is through the establishment of a broad-based National Commission on Tax Reform.
He said that tales abound about how friends and the criminally inclined are “facilitated” by the tax administration. And while these observations by themselves would represent a system gone horribly wrong, one would find that many taxpayers look on the tax administration authorities as, “not only rewarding those who are politically favoured, but also using the system to punish those politically out-of-favour.”
Regrettably, once the tax system acquires the reputation of being misused and abused for political ends, it becomes exceedingly difficult to recover the authenticity of the system, the professor explained.

 

 

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