Auditors are major players in Tax evasion – GRA Commissioner

Nov 12, 2013 News

---

 

 
By Kiana Wilburg
Chartered Accountant Christopher Ram and economist Dr. Clive Thomas are of the belief that tax evasion, even in the face of the “shamefaced” attempts by the government to reform the Tax system, is now, more rampant than ever.
However, the Commissioner General of the Guyana Revenue Authority (GRA), Mr. Khurshid Sattaur, asserted that root of the illegal practice is the executives of major companies who are allowed to live extravagant lifestyles due to the aiding and abetting that takes place between them and their auditors.

Tax evasion is the method of illegally avoiding taxes one owes and on an aggregate basis, hampers governmental efficiency.
While taxation is considered a major tool of economic management, Ram said that “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, said, “Today, the tax system is fractured and, far too costly, burdensome, and inefficient.”
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.
Several of the most important reforms are in the pipeline. They 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.”

He added, “The administrative capability to deal with this crisis must be enhanced by better staffing, training and salaries.”
However, contesting these statements was GRA Commissioner General, Khurshid Sattaur.  “While Mr. Ram seems to be suggesting that the GRA has a resource problem, it is regrettable that he does not recognize the tremendous changes that have occurred.”
“These include major reforms in the information technology infrastructure, creation of a semi autonomous agency that is outside of the public service, significant reforms in operational procedures that resulted in over 400 Standard Operating Procedures (SOP) in use and the reform of the actual organizational structure from being a tax type to a functional organization.” He added that Professor Thomas is not aware of the vast improvements that have occurred over the past 13 years in revenue collection.
Sattaur said, “Even though I accept that there is room for improvement, it should be noted that ten years ago, the aggregate collection was a mere $50 billion. At the same rate of exchange, it is expected to be in excess of $125 billion by the end of the year and this is achieved despite abolishing six taxes and introducing VAT to replace these inefficient taxes.
“In addition, the threshold today is $600,000 per annum compared to probably thirty-three per cent of that years ago and reduction of rates as well. Even companies now pay as low as 30 percent, which is the same rate that individuals pay.”
The Commissioner General reiterated his disagreement with the belief purported by the duo that tax evasion is on the increase as GRA has seen a massive increase in the amount of revenues collected. Moreover, Ram on his website (http://www.chrisram.net.) called for more relevant information to be disclosed in public documents.
“Principal among these would be the annual report of the Guyana Revenue Authority which the Minister of Finance has failed to table in the National Assembly for some time now. Let us see how much the construction sector, the bauxite sector, the forestry sector, the agriculture sector including rice, sugar and other crops sectors contribute to the national coffers, and how much remissions, rebates and holidays they receive which may amount to billions each year.
“We should be able to see how much each region contributes and compare this with their receipts from the central government,” the accountant said.
However, Sattaur in response to this said, “There seems to be an agenda to bring down the agency and the government at all cost. GRA is audited by the Auditor General and the findings are laid before the Public Accounts Committee every year.”
“If we have to get to the heart of tax evasion, then one would have to investigate the lifestyles of some of these major company executives who are allowed to pander to their luxurious and insatiable appetites from the high level of aiding and abetting that takes place with their auditors. One should ask Mr. Ram. He will enlighten you. That’s why the accounting profession which has a major role to play is silent as they are the main contributors.”

 

 

---

---