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Punitive budgetary measures will contribute to expansion of underground economy – PSC
By Abena Rockcliffe- Campbell
“Stricter the government, wiser the population” is what Executive Member of the Private Sector
PSC Executive Member, Ramesh Persaud
Commission (PSC), Ramesh Persaud, reminded the media as he spoke about the many punitive measures proposed in Budget 2017. This was at a press conference the commission held on Thursday.
Persaud said, “I am not sure why we continuously think that punitive measures will enhance the tax net and bring more people on board. The more punishment you put, the harder it is to have people in the informal sector become formal. (Certain punitive measures) will contribute to the expansion of an underground economy.”
Persaud said that he is struggling to see the wisdom behind Government’s proposal to implement a plethora of punitive measures in one go. He zeroed in on the measures in relation to record keeping.
During the delivery of his Budget Speech, Minister Winston Jordan, said that the penalties for failing to keep proper books and records are lenient. He said that as a result, many taxpayers, particularly the self-employed taxpayers, fail to keep proper books and records. Jordan then announced that the penalties will be increased to $200,000 or five percent of the tax assessed, whichever is greater.
He said too that taxpayers fail to present books, records and other information in a timely manner. He told the National Assembly that audits are greatly affected by the lack of evidence to justify disclosures in financial statements. Jordan then proposed to increase the fine to $200,000 and/or six months imprisonment.
At Thursday’s press conference, Persaud pointed out that the proposed penalties are not to be implemented on corporations alone but everyone who has even the smallest of businesses.
Noting the penalty of fine or jail time, Persaud questioned, “Can you imagine if an audit is being done on Stabroek Market, Bourda Market or on minibus operators how much $200,000 we will collect or how much space we will have to find in the prison?
Persaud said that the PSC agrees that businesses must maintain records, “but what about the small business, the vendors; are we going to force all to hire accountants to do their records?”
The PSC member said that big business will be fine. “We have nothing to worry about, we will present our audited accounts, and we will have our books in order. Our concern is about the farmers and the vendors.”
Persaud continued, “I do not know whether that will contribute to people being excited to come into the formal system or if it will further contribute to the expansion of the underground economy…You know the old saying the stricter the government the wiser the population.”
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