It is a pleasure and honour to have been given
the opportunity to be here this morning, and to
extend a warm welcome to you on behalf of the
Government and People of Saint Lucia. I have been advised that the last meeting of COTA to be held in St. Lucia was over twenty years
ago. So far back that it is a vague memory for even
the longest serving members of staff of the Inland
Revenue Department.
I humbly submit, that too much time has
elapsed since being given the honour of hosting this
most auspicious event, and I am indeed well pleased
to see all of you back in Saint Lucia for this year’s
meeting, the Nineteenth General Assembly and
Technical Conference of your Organization. I also
wish to express my sincerest thanks to your
Executive Council for selecting Saint Lucia as the
host for this conference.
I am pleased to note, that St. Lucia has
remained very active in COTA, with former
Comptroller of Inland Revenue Mr. Trevor Brathwaite
serving as president from 1998-2000.
I have been informed of the objects of COTA
which includes the holding of meetings; conferences;
assemblies for the exchange of ideas and
experiences; to organize and conduct seminars; to
promote and exchange experts and expertise; to
develop tax administrations; and to provide advisory
and technical service in taxation, among others.
Based on these objects I can fathom the relevance
and significance of your organization to the
Caribbean region, and would urge that it be given
the appropriate level of support in terms of
clarity, and a well articulated vision.
I have also been apprised of your conference
theme, and your schedule of activities over the next
four days, and I am particularly impressed with the
profoundness of the tax issues that you intend to
explore, discuss and debate. Your conference theme “Options for Building
Strong Economies through Innovative Tax Policies and
Administration” quite aptly embodies and captures
the range of challenges facing our tax systems, and
I will spend some time over the next few minutes to
highlight some areas which may be useful as you
develop the theme for your assembly.
Let me start by saying that the establishment
of efficient and effective tax policy and tax
administration is fundamental and critical in the
development of sound fiscal management. Expansion of
tax revenues and by extension public expenditures,
have become inextricably linked to economic growth
and social stability. Therefore, there is a need for
policymakers and tax administrators to foster
improved harmonization of tax policy; improve their
enforcement of tax administration; and to improve
taxpayer services and the promulgation of taxpayer
rights.
These represent the key elements of good
governance and sound fiscal management, and must be
recognized, and vigorously pursued at all times by
policymakers and administrators if significant
improvements are to be achieved in the development
of strong societies in the Region.
However policymakers and tax administrators
would have to contend with some challenges.
First of all, tax systems must be made
flexible and responsive in order to keep pace with
new developments, while remaining as simple as
possible in order to curb the risk of non-compliance
and compliance costs.
Secondly, tax systems must conjure a sense of
transparency if it is to ensure that taxpayer rights
and privileges are protected.
Thirdly, tax systems must ensure that the
correct tax is paid at the right time and in the
right place, and little opportunities are created
for fraud and tax evasion. Indeed, tax evasion and
avoidance lead to budget losses, and infringe on the
principle of fair taxation.
In Saint Lucia over the past few years by virtue
of a changing economic environment triggered by a
decline in the key agricultural sector, primarily
bananas, we have had to display some degree of this
responsiveness that I mentioned previously, and to
make adjustments to our tax system to usher in
targeted fiscal measures. These included:
• A reduction of the corporate tax rate from
331/3% - 30%
• The introduction of capital
allowances on commercial buildings
• Introduction of
group loss relief to companies
• Introduction of a
micro and small business incentive package which
includes special tax rates from 10-20%.
• More
recently varying levels of tax incentives for
companies and individuals looking to take advantage
of the opportunities offered by Cricket World Cup
2007.
• Increase in personal income tax allowance
from $10000 – $16000.
• Allowing up to a maximum
deduction of $5000 for individuals investing in the
shares of Public Companies
• Various levels of
relief in the property tax regime.
The effect of these and many other levels of
tax relief and tax incentives introduced I believe
are beginning to manifest themselves, and are
developing into measures of tremendous assistance to Saint Lucian individuals and businesses alike.
With most of the OECS just making their entry
into the CSME, to join with the others who have gone
before, the subject of taxation, and in particular
tax harmonization will gain increased prominence.
While I believe that some level of tax competition
is inevitable, we have a responsibility to ensure
that it does not become harmful, and harmonization
in certain respects may achieve this. Harmful tax
competition if allowed to perpetuate, has the
potential to undermine CARICOM Member States’
capacity to finance essential public services.
Therefore, the region must engage in the
simplification of its tax laws, and to do so
whenever possible, harmonize these laws when
appropriate, and engage in greater cooperation and
coordination on tax matters when necessary. In this
way, member states tax policy and administration can
promote competitiveness, economic growth and
employment within CARICOM.
The CARICOM Double Taxation Agreement (the CDTA) and its several provisions (including Exchange
of Information provisions) giving directives on
taxing rights within CARICOM is therefore an
instrument of great importance in this context, and
one which must be made central in the settlement of
tax issues in the Region.
It therefore becomes extremely important that
we do not miss the opportunity to identify areas of
mutual interest with respect to tax matters, to
learn from each other, and benefit from best
practice.
Following closely on the heels of tax policy
is tax administration. In order to add value, and
become more relevant in this ever changing economic
and social environment, tax administrations in my
view must make certain adaptations.
First is the issue of simplification. The
streamlining of procedures, and in particular the
issuing of clear, transparent, and taxpayer friendly
procedures (including tax return forms) must be
introduced. Overcomplicated tax requirements and
procedures foster additional compliance costs for
those who want to participate and to be a part of
the process, as they are obligated to. It can also
lead to non-compliance.
Special attention should therefore be given
to the education of taxpayers with regards to the
tax legislation, and also for the development of a
“customer service” culture when dealing with tax
payers. Establishment of transparent grievance and
appeals procedures clarifying taxpayers’ rights is
also an area to be given special attention, and will
assist tremendously in that process.
Secondly, modernizing the business aspects of
tax administration, relying heavily on information
technology to improve on speedy, effective and
efficient delivery of services to taxpayers. In
Saint Lucia and most of the OECS we have seen the
emergence of SIGTAS, and the remarkable
transformation it has introduced to our tax systems.
Thirdly, reorganizing our tax administrations
to deal with business opportunities created by new
technologies, such as electronic commerce, and
developing new taxing methods to deal with such
issues.
The subject of tax policy and administration
is so wide and convoluting; I would need to speak
for a whole day to cover the many interesting
aspects of this discipline. However, time is not
going to permit me to do so.
The discussions that will follow today I am
confident will in a very protracted way explore some
of the areas that I have touched on in my
presentation. The wide range and nature of topics
you have selected for this conference bears
testimony to this.
I would like to take the opportunity once
again to congratulate COTA on the work that it has
been doing in the area of tax administration in the
Caribbean. The large number of countries represented
here today, and also the presence of other regional
and international tax organizations indicates the
leading role that COTA is providing in promoting the
tax dialogue in the Caribbean, and bringing to bear
on forums such as this the collective minds and
experience of Caribbean tax policymakers, and tax
administrators.
Let me close by saying that tax
administrations in the Caribbean, which I believe is
true the world over, must look outside themselves,
because the solutions to some of the problems
encountered from day to day are not always
forthcoming. I urge you to build on the spirit of
understanding, cooperation and coordination that
exist with your tax administrations, and allow these
to translate into a platform for good quality,
efficient and effective tax policies and principles.
I must repeat that good taxation policy,
strong tax administration, and their continued
movement towards innovation and improvement as
outlined in your conference theme, is key to
sustainable economic growth, strong entrepreneurial
conviction, and acceptable levels of job creation in
the region.
I wish to extend my best wishes for a very
fruitful and most productive Nineteenth General
Assembly and Technical Conference.
I also wish all of you a wonderful stay in Saint
Lucia.
I thank you.
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