The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government’s Central Revenue Administration (CRA) has hired 75 per cent of its target staff, and anticipates being operational in “less than three months”, amid concerns over whether all its recruits have the necessary tax enforcement skills.

Tribune Business has obtained internal government documents showing that moves to hire ‘contract’ Value-Added Tax (VAT) Unit staff as full-time public servants in the CRA are well underway.

However, the majority of these ‘contract’ workers are ex-bankers who worked “for the most part” in customer service, rather than the auditors, attorneys and administrators who are normally employed for tax enforcement and collection.

This raises questions about whether the CRA, which will be responsible for collecting the bulk of the Government’s non-Customs revenues, will be appropriately staffed with the necessary skilled, technical workers necessary to collect every dollar due to the Treasury at a critical time.

The documents also show that 11 out of 18 ‘contract’ workers that the Government was recommended to hire for the CRA needed to accept salary cuts ranging from 11.8 per cent to 30.2 per cent of what they were earning when on ‘contract’.

Contract salaries ranged from $42,000 per annum to $21,552, and the civil service pay scale was pegged slightly lower at between $40,450 to $17,550.

However, John Rolle, the VAT Comptroller, brushed aside these concerns, explaining that staff training and systems development would ensure any CRA ‘skills gaps’ were eliminated.

He added that the Government was “very confident” that the skills required by the CRA are available in the Bahamas to collect not just VAT, but a host of other taxes it will be responsible for - real property tax, Stamp Duty and Business Licence fees.

Mr Rolle said “noticeable progress” had been made on staff training, with the integration of other revenue agencies into the CRA set to be complete by September 2015.

Given that the Government is projecting that the CRA will collect $344 million in VAT revenues; $151 million in real property tax; $97 million in non-Customs Duty; and $140 million in Business Licence fees for the 2015-2016 fiscal year, it is an agency that the Government - and the Bahamas as a whole - simply cannot afford to get wrong.

It will be collecting a projected $732 million over the coming 12 months, making it the Government’s second biggest income generator behind Customs, and accounting for 43 per cent of total tax revenues.

“We have completed plans to integrate the operations of major revenue agencies, including VAT, into the Central Revenue Administration. We are less than three months from the end point,” Mr Rolle told Tribune Business yesterday.

He added that the CRA’s staffing levels were not expected to be more than 200 once the integration with the Department of Inland Revenue, with 75 per cent of recruits already hired.

“Now we have a staffing that is approaching 150 persons. Increasing to the upper limit is going to be gradual as the CRA builds capacity in audit and debt collection,” he added.

Mr Rolle confirmed that the VAT Unit when formed “had a majority of contractual recruits” who were not on the full-time civil service payroll.

He added that “prospects are good for their retention”, with the interviewing and hiring process “nearly completed”.

Yet Mr Rolle did not, though, respond directly to Tribune Business questions over whether many of the contract workers being hired for the CRA were ex-bankers who specialised in customer service, rather than workers possessing the skills to oversee collection of $732 million in taxes.

This is suggested by an April 30, 2015, memorandum written to Mr Rolle by Roger Forbes, head of the Inland Revenue department, which reports on the progress made in interviewing contract VAT Unit workers for full-time civil service posts with the CRA.

“The Board noted that the majority of the officers [interviewed] were formally employed in the banking area with responsibilities, for the most part, in customer service,” Mr Forbes wrote.

“We also noted that in a great number of cases their current contractual salaries far exceeded the maximum salary than can be paid based on the public service approved and proposed career path.

“Most of the interviewees expressed the expectation of being permanently employed at a higher salary or, at the least, at their same current salary.”

Some 18 of the 37 persons interviewed were recommended for full-time civil service posts, based on their qualifications, interview performance and reports from VAT supervisors. Yet the majority, 11, would have to take basic salary cuts if they joined the CRA full-time.

Of the interviewees, five were recommended to be kept on as contract workers, while four had “no clear role” as the VAT registration unit’s task had “diminished”. Another six failed to make the grade, and were to be released when their contracts expired.

In response to Tribune Business’s queries, Mr Rolle merely said: “We are making progress with training and development of enforcement systems.

“There is noticeable progress. The priority now is to complete the transition to the local activities that will be subject to VAT after June 30.”

He added: “We are very confident that the local skills exist. The next major recruitment wave will complete the resources needed for tax audits.

“We are making good progress in developing the formal audit framework, which we will be equipped to deploy within the first year of VAT, after we have accumulated a satisfactory number of tax returns.”

Gowon Bowe, the Coalition for Responsible Taxation’s chairman, suggested to Tribune Business that too much was being made of Mr Forbes’s memorandum when this newspaper read it out to him.

He added that the Government, given its dire fiscal position, could not compromise the success of VAT and revenue enhancement by creating a CRA that lacked the necessary skills.

“I wouldn’t get too ahead of the game on that one,” Mr Bowe told Tribune Business.

“The Prime Minister, Michael Halkitis and John Rolle certainly know the importance of the CRA, and we have to trust their fiduciary responsibilities to find the appropriate people to make this run.”

Mr Bowe added, though, that the Government needed to be careful not to consolidate skills gaps in current revenue agencies into an even bigger ‘gap’ when they are merged into the CRA.

Suggesting that the Government cast its net wider than the revenue agencies for CRA staff, Mr Bowe said there would be a need for some ‘customer service’ staff, although the majority would be from technical backgrounds such as accountants and administrators.

He added that CRA job descriptions, and the required skill sets, should also be made public to increase the likelihood that the Government could attract the ‘best and brightest’.

John Pinder, the Bahamas Public Services Union’s (BPSU) head, told Tribune Business he knew numerous workers had been hired ‘on contract’ at the VAT Unit to meet the rush to implementation.

These workers do not enjoy pension and other civil service benefits, as they are not full-time, and Mr Pinder said he knew many VAT ‘contract’ workers were waiting to be “regularised” and brought on to these.