The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government is targeting an extra $400 million within two years from its crackdown on tax cheats, a top official yesterday revealing enforcement efforts were already yielding an extra $15 million per month.

Simon Wilson, the Ministry of Finance’s financial secretary, said the $400 million goal was “quite achievable”, the Government’s advisers having suggested it could collect twice that amount through an even more aggressive compliance offensive.

He told the Chamber of Commerce’s State of the Economy 2017 forum that the enforcement crackdown, launched late last November, had generated the extra $15 million per month just from New Providence.

Mr Wilson added that the crackdown had yet to extend to other islands that generated significant economic activity, such as Abaco, Grand Bahama and Eleuthera, implying that yields would further rise when this happens.

“We see businesses adjusting to the strengthened compliance. We feel this is going to be very, very successful,” Mr Wilson said.

“On average, this effort has yielded $15 million a month. Our target is $400 million in two years in incremental revenue without adjusting [tax] rates. We believe that’s quite achievable.

“We’ve listened to our advisers, who suggested taking a more aggressive stance. Their target is two times’ that. And that $15 million is only on New Providence,” the Financial Secretary added.

“We’ve not stepped out beyond New Providence yet. We’ve not looked at Abaco, we’ve not looked at Eleuthera, and we’ve not looked at Grand Bahama. We’ve not put in the full strength of compliance.

“We see momentum increasing, and momentum being built. We have, on the metrics, been moving in the right direction on the tax programme.

The Government’s crackdown is targeting four key taxes - VAT, Business License fees, real property taxes and Customs duties, as it bids to enhance cash flows by collecting every cent in taxes due to it.

Mr Wilson suggested yesterday that the effort was being expanded, revealing that the Department of Inland Revenue was focusing on 800 entities, importing/selling more than $30,000 worth of goods per year, who do no possess or pay for Business Licenses.

He added that some of these 800 might be ‘trade names’ used by persons, as opposed to entities with a physical presence, and said: “We’ve started a pilot project this week looking at those persons.”

Mr Wilson said he and the Government were seeking to avoid new or increased taxes in trying to boost its annual revenues by around four-five percentage points of gross domestic product (GDP).

Total government revenues are currently equivalent to 22 per cent of GDP, with 26-27 per cent required to achieve a Budget surplus, he added.

Mr Wilson said the Government felt it could get there through greater compliance and enforcement, and a broadening of the tax base.

“The obvious way to get there is increasing tax rates or finding new taxes,” he acknowledged. “We’ve taken a new approach because the system is sufficient to achieve this by being more aggressive on tax compliance.”

Mr Wilson said there were 24,000 properties in New Providence whose owners had not placed them on the roll for real property tax purposes, and said the Government was taking a “brute force” approach to remedying this and the multi-million dollar arrears that have built up beyond $500-$600 million.

“Some of you will have received a second [payment] note for the first time,” Mr Wilson told his private sector audience in relation to real property tax. “We have people going to the door and leaving the bill. To my mind, it’s been one of the success stories.

“A former financial secretary came to the property tax office because they’d got a property tax bill signed and delivered.

“I also got a call from a former permanent secretary and senior official in the public and private sector. He said: ‘Mr Wilson, it’s very disrespectful; a senior civil servant should not have got a demand payment. You should have called me.’ Again, it’s been very effective.”

Arguing that the Government had “been very aggressive in the area of tax reform” since the Christie administration took office, Mr Wilson said that numerous initiatives had been undertaken besides VAT that were “equally transformative” but “below the radar” and “not talked about”.

He added that processes relating to the importation of air and sea cargos had been strengthened, a move that had both boosted revenue yields and helped detect “contraband” smuggling, such as guns and ammunition.

“Last week we met with the shippers,” Mr Wilson said. “We’d identified significant numbers of shippers allowing goods to come in without proper Business Licenses and names.”

Imposing the ‘3 per cent of gross revenues’ Business Licence fee on the commercial banks had yielded $36 million in annual revenues, he added.

Mr Wilson, though, said the Government had not solely been focused on compliance and enforcement measures.

The removal of the 10 per cent hotel room/occupancy tax had cost the Government around $30 million in annual revenues, he explained, while the Business License had been simplified into two categories - gas stations and all other businesses.

Customs duties had been eliminated on 300 items, while the change from the Cost, Insurance, Freight (CIF) method to Freight on Board (FOB) had also produced savings for importers and their clients. Mr Wilson said this had saved Japanese car importers around $2,000-$3,000 per vehicle.

“We’ve taken a very aggressive stance in rebalancing the system, looking not only for yield but equity,” the Financial Secretary said, pointing out that VAT had expanded the tax base to include services industries.

“For many businesses, the overall tax burden has dropped. Some businesses, because of the way the tax system was set, were not being taxed equitably. We’ve shifted and rebalanced the system.

“In fairness to what we’re doing, it’s broad-based. We’re not trying to overburden one sector, even though I believe there are some sectors that are seriously under-taxed.” Mr Wilson did not identify those sectors.