The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government would “be better off” outsourcing collection of $557 million in unpaid real property taxes to a foreign company, a leading businessman yesterday arguing this would prevent family and political pressures from undermining the initiative.

Dionisio D’Aguilar, Superwash’s president, told Tribune Business that it would be “very hard” for a Bahamian debt collection not to succumb to societal ‘influences’ that might compromise efforts to collect the Government’s long-standing tax receivables.

Suggesting that the Government’s proposed Central Revenue Agency (CRA) would likely encounter the same problems, Mr D’Aguilar said many Bahamians and residents failed to pay due real property taxes because they believed there were no consequences for not doing so.

He contrasted this attitude to the leading industrialised countries, where taxpayer compliance levels were much higher because the authorities had a much more “clinical approach”, involving use of the courts regardless of who the defaulter was.

Prime Minister Perry Christie, in closing the Mid-Year Budget debate, confirmed that the Government was set to contract private sector debt collection agencies to try and recover unpaid real property taxes thought to total $557 million. It was effectively an admission that the Government is unable to collect the taxes owed to it.

Mr D’Aguilar and others have long called for the Government to outsource unpaid tax collection to the private sector, arguing that the latter would be far more efficient and effective in carrying out such a mandate.

While reaffirming his personal backing for the initiative announced by the Prime Minister, Mr D’Aguilar expressed doubt whether the Government would have the political will to follow through on it.

“I don’t think they want to give up control,” the former Bahamas Chamber of Commerce president told Tribune Business. “They should do it, most definitely.

“It should be a bidding process where companies have to pre-qualify, and it has to be transparent.”

Mr D’Aguilar said that to do otherwise would expose the Government to accusations of favouritism and political cronyism, as often occurs, and claims that the selected debt collection company(ies) had been chosen because of affiliations with the governing party.

“You have to be careful collecting these taxes, and give it to a non-political, non-partisan, independent, non-affiliated company,” he added.

And, with a Bahamian-owned debt collector likely to come under pressure to ignore the unpaid taxes owed by family members and others with ties to its owners and employees, Mr D’Aguilar suggested: “You’re almost better giving it to a foreign company, because they’d not be subject to the problems that arise when you’re in a small community and have to collect money from your relatives.

“There’s only one way to guarantee that: Have a company that is non-related to anyone. It’s very hard to do. If it’s a Bahamian company, they’ll say: ‘This is my mother, this is my cousin’.”

The businessman added: “This is a rhetorical question: ‘How do I do it and not be accused of giving it to my people?’

“Then the chosen firm is subject to the same problems the Government is. You’ll get people calling you, saying: ‘This is my relative’. You’ve got to turn a blind eye to it, and it’s very hard to do in a small community.

“You’ve almost got to get a third party, independent to come in and, I wouldn’t say recklessly, but thoroughly collect it from whoever.

“If you want it done clinically and properly, I can’t see how you can do that with a Bahamian company doing it.”

Still, Mr D’Aguilar agreed that the Government and politicians needed to be removed from the process involved in collecting real property taxes and other unpaid bills owed to the Government.

He pointed out, though, that the Government would still have to “facilitate” real property tax enforcement by making it easier to seize, foreclose on and sell the properties owned by delinquent taxpayers who simply refused to pay.

“It’s a very cumbersome process through the courts. You need to make that easy to do,” Mr D’Aguilar said, arguing that this was the only way to ‘ram home’ to many Bahamians that the Government was serious about compliance.

Calling on the Government to ‘think through’ its tax collection outsourcing plan, and not simply farm it out, he added: “I think they can get quite a high yield rate from people who can pay but don’t, because it can be enforced by a lien against the property for non-payment.”

Comparing the Bahamas’ approach to tax collection with that prevalent in major industrialised countries, Mr D’Aguilar said: “In first world countries, they have such compliance because they have just a clinical approach to it.

“Taxes owed, they don’t care who you are, who you’re related to, you’re going to be taken to court to pay it.”

When it came to the Bahamas, he added: “The current system is simply not working. It’s broke and failed. Nothing is being done about it.

“It’s extremely naive for the Government to believe people don’t pay real property taxes because they don’t get a bill. People don’t pay real property tax because there’s no consequences.”

Mr D’Aguilar suggested that any debt collection agency selected by the Government should be compensated, at least in part, via a percentage of the tax liabilities it collected. Others have suggested that the Government sell its real property tax liabilities as one lump sum, getting a cash payment in return from a private firm that would then seek to collect them.