The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Ministry of Finance's top official has blamed COVID-19 for disrupting the "ramp up" of its tax cheats crackdown through a unit charged with ultimately generating $80m-$100m in extra revenues per annum.

Marlon Johnson told Tribune Business that the Revenue Compliance and Enforcement Unit had made "slower progress than we'd have liked to this point" despite making a $39.2m "fiscal impact" during the first ten months of the current 2019-2020 fiscal year.

"It's still a work in progress," he disclosed. "They're just ramping up. The recruitment has happened and staffing. They've been doing satisfactorily but are still very focused on training and familiarisation. It's been going slower than we'd liked it to have been at this particular point because of the disruption" caused by COVID-19.

Mr Johnson added that "another $80m to $100m a year is what we anticipated" will be yielded by the Unit, which is charged with cracking down on tax cheats and delinquents in the key revenue streams of VAT, Business Licence fees, import duties and real property tax.

"The great majority of taxpayers are honest and pay their taxes on time, and don't want things diverted by people who cheat the system," he said. "Taxpayers, knowing there is an active audit unit, will change their behaviour and actions."

The Revenue Enhancement Unit has been the subject of much political debate since it was formed in January 2017 under the former Christie administration. Following the 2017 general election, the Progressive Liberal Party (PLP) accused the Minnis administration of undermining the battle against tax cheats by shutting the unit down.

Moody's, the international credit rating agency, revealed in a mid-summer 2017 report that the Christie administration's unit had yielded some $90m in revenues during its first six months in existence, putting it on target to generate $180m in extra annual income for the Public Treasury.

Its successor, though, argued that the Christie administration had failed to provide the unit with any legal basis for its activities. It also argued that it was staffed by foreign accountants, with few to no Bahamians, and no training programme to enable them to take over.

K Peter Turnquest, deputy prime minister, in kick-starting the 2020-2021 budget debate on Monday, said "cracking down on tax cheats and ensuring the government obtains every cent due to it is one area where the Public Treasury's income might improve amid the COVID-19 pandemic's fall-out".

Praising the Revenue Compliance Unit, which was first conceived under the former Christie administration, for achieving "exceptional results", Mr Turnquest added: "The Unit has had a total fiscal impact of $39.2m in the first ten months of the 2019-20 fiscal year. The Revenue Compliance Unit is currently composed of 35 persons, and we have approved additional staffing for 12 more qualified Bahamians.

"The field audit team identified and assessed an additional $9.9m. Part of their process is to ensure taxpayers understand the reasons for the changes to their filings with the intention that they will be able to report accurately going forward.

"These results were achieved with the hiring of 12 Bahamian auditors in August 2019. We have approved additional staffing of four auditors, who are expected to be on-boarded when business returns to normal. I remind this House that this Bahamian audit team will be replacing the team of foreign auditors that the former government had engaged with absolutely no plan to recruit and train Bahamians for the job."

Mr Turnquest added: "The collections team, amplified by additional hirings last year, collected $11.7m. Prior to the pandemic, we were in the process of hiring an additional three collectors to address the existing accounts receivable backlog. We intend to proceed upon resumption of normal business activities.

"Lastly, the Revenue Compliance Unit was recently given responsibility for the collection of all outstanding real property taxes. In addition to the current complement of eight call centre agents who actively pursue these debts, we have dedicated resources to hire an additional five Bahamians to increase the number of collection calls. In the first ten months of 2019-2020, this team had a fiscal impact of $17.6m."