Being entrusted with the colossal task at the
closure of this conference to share our views on the
conclusions and recommendations of the conference,
first of all, on behalf of the Government of the
Turks & Caicos Islands, I would like to sincerely
thank COTA for extending an invitation to allow the
Turks & Caicos Islands to be a part of this 19th
General Assembly and Technical Conference held in
the beautiful island of St. Lucia.
In a time of rapid changes, one has to wonder if
a Bi-annual meeting appropriately addresses the
needs of our Tax Administrations developments or if
an annual meeting may be more useful - a matter for
the Executive to debate, probably in the
Administrative Session.
Before we proceed with our evaluation, special
credit must be given to the Comptroller of Inland
Revenue, Mr. James Charles and his dedicated Staff
for the hard work that was involved in the hosting
of this conference that ultimately allowed it to be
a great success.
I must say that we were a bit saddened that the
Prime Minister, Dr. the Hon. Kenny D. Anthony was
unable to join us for the opening ceremony to
deliver the key note address. Our sincere gratitude
is extended to the Permanent Secretary, Finance for
standing in for the Prime Minister.
The fanfare and pageantry of the opening ceremony
was truly delightful with the various artistes
showcasing their musical talents that calmed the
novice delegates.
Over the past few days of deliberations, members
presented various topics surrounding the theme,
“Options for Building Strong Economies through
Innovative Tax Policies and Administration”. To
recap, we covered such topics as:
i. Innovative Tax Policy for a Developing Economy
ii. Double Taxation Agreement Conventions iii.
Innovations and Options in Management of Tax
Administrations iv. Options and Innovations for
Optimizing Revenues from Taxes on Consumption v. Tax
Implications on Innovations in technology
(e-commerce, call centers, internet cafés) vi.
Options for Innovative Tax Administration of
International Transactions for Transfer Pricing vii.
Options for Evaluating Performance of a Tax
Administration Agency viii. Options in Tax Policy
and Administration for the Financial Services Sector
ix. Innovations and Options in Tax Administration on
the Underground Economy x. Implications for Tax
Administration in CARICOM Single Market and Economy:
Individuals, Trades and Business, Companies
It is interesting to note that other measures can
be implemented without the introduction or
continuance of personal income tax, as in the case
of the Bahamas and Turks and Caicos Islands. Both
countries, as well as other Caribbean countries,
depend heavily on customs duties to sustain a viable
economy. With the imminent introduction of Value
Added Tax (VAT) and the reduction or elimination of
customs duties, we no doubt have to think seriously
of innovative tax policies and administration.
As expected, a number of countries are incurring
increasing expenditure (some in excess of revenues
collected). Bahamas’ policy to hold 5% of the
expenditure to circumvent the excessive spending is
noteworthy and can be considered by other countries.
The focus however, appears to be on maintaining the
projected deficit position instead of aiming for
surpluses.
Policies need to be introduced and adhered to if
we are to maintain effective economies. During
budget preparations, governments set their targets
for the fiscal year, but unfortunately tend to
deviate during the year, which results in excess
expenditure, increased deficits and in some cases,
loss of revenue. And, here is where the political
burden is being placed on tax administrations to
improve tax collections using innovative strategies.
Stronger economies can be built by implementing
policies including investment incentives, keeping in
line with budgets, effective communication and
enhancing of revenue legislation.
Policymakers and managers are expected to be
apprised of all financial matters that would have
implications on the economy; hence, regular
reporting is crucial in making informed decisions.
Improvement comes with modernization and
globalization. Our countries now have to enhance our
systems to include the acceptance of credit card
payments and e-commerce. Other areas of our tax
administrations also have to be strengthened, and as
was demonstrated in our workshop, tax administrators
can become creative in providing alternative options
in the areas of:
· Human Resources · Communications · Customer
Service · Receivables · Audit and Investigation ·
Use of Technology
One such idea that stands out is working with the
service providers in sending text messages regarding
taxpayers’ obligations.
With respect to Double Taxation, although the
CARICOM Double Taxation Agreement is in place, it
was obvious that all CARICOM countries do not
conform to the Agreement, but instead, abide by the
regulations of their respective countries,
regardless of the signed Treaty. It appears as
though countries are focusing more on national
benefits instead of regional interests, as decisions
made do not affect all countries in the same manner.
This outlook could prove to be a hindrance in
building Caribbean Unity. It may be prudent to
revisit the CARICOM Treaty with a view of getting
each member state to have the same interpretation of
the Treaty and apply common principles to build one
strong economy.
Jamaica’s model of replacing eight (8) tax items
with General Consumption Tax (GCT) may soon be seen
throughout the Caribbean, as most countries will be
introducing VAT. As Jamaica already has success in
this area, other Caribbean countries can learn from
Jamaica’s experiences and get the necessary
assistance from Jamaica, instead of duplicating the
same efforts. If necessary, modifications can be
made to be consistent with the regulations of the
respective country. However, one has to also be
mindful of Jamaica’s compliance rate which is still
not at a level they want it to be.
Another valuable lesson that ought to be learnt
from the Jamaica experience refers to taxpayers’
education programmes to improve voluntary
compliance. Most tax administrations have difficulty
in getting delinquent tax payers to meet their
obligations, but Jamaica conducts seminars to
educate their delinquent customers.
The informal sector does present some of the
greatest challenges for Tax Administrations mainly
because of who the players are in most cases. This
sector tends to have a high percentage of customers
who are less knowledgeable about tax matters as
opposed to deliberate tax evasions. Education is
critical for bringing these persons into the tax net
so that they can see and understand the benefits of
compliance.
Although almost all of us did not acknowledge our
involvement in Performance Evaluation, I am sure
that we are in some way evaluating our performance
as Tax Administrators. We contribute annually to the
overall fiscal and economic position of our
respective countries; this could not have been
achieved without effective decision making and
strategic planning.
To increase our output, however, we need to
ensure that we continuously utilize -
- Performance measurement systems
- Benchmarking
- Performance standards
The presentation by IMF on “Options in Tax Policy
and Administration for the Financial Services
Sector” presented food for thought. As this sector
is financially sound, consideration should be given
to this issue.
In presenting the size of the Shadow Economy, it
would have been beneficial to hear the statistics
for the Caribbean to see how we compare to the rest
of the world.
The Underground Economy is very familiar to all
of us. Unfortunately, the major culprits of tax
evasion will continue to benefit due to political
interference.
Tax administrators should follow the presumptive
approach, as presented, as a beginning process in
dealing with tax evaders. This approach should
improve compliance, especially if the traders are
overtaxed; this method will force them to declare
their earnings.
For countries which have not been able to deal
with this issue can also take the Bahamas approach
in amending the Customs Form to include a Tax
Identification Number (TIN) [National
Insurance/Social Security number]. Additionally, a
flat rate can be imposed on small traders who are
not declaring their earnings.
It was interesting to sit and listen to the
various papers presented by delegates of different
countries; it appears as if the more we struggle to
unify most of our methodologies, we are still far
away from achieving this objective in reality. One
must ask if we are truly accomplishing CARICOM
Unity.
We have learnt so much from each other over the
last four days. As we return to our respective
countries and Tax Administrations, we must try to
incorporate some of the suggestions presented, with
a view to adopting options for building stronger
economies through innovative tax policies and
administration.
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