Mr. Master of Ceremonies
Hon. Prime Minister of Saint Lucia
ministers of the Government
father Jerry Bernier
President of COTA
Executive Secretary of COTA
Distinguished Delegates
Invited guests
Ladies and Gentlemen
Members of the media
I am especially honoured to address this Opening
Ceremony on the occasion of the 19th General
Assembly and Technical Conference of the Caribbean
Organisation of Tax Administrators (COTA).
This General Assembly and Technical Conference is
being convened at a most propitious time in our
history – a time of considerable change in the
economic landscape of our countries and our Region,
a time when I am proud to announce that the
Caribbean Community is well on its way to
establishing a Single Market and Economy.
As you may
be aware, as of 3rd July 2006, the CARICOM Single
Market now comprises twelve (12) Member States with
the signature of the “Declaration of Participation”
by the Prime Ministers of Antigua and Barbuda,
Dominica, Grenada, St Kitts and Nevis, Saint Lucia
and St Vincent and the Grenadines. They joined the
Prime Ministers of Barbados, Belize, Guyana,
Jamaica, Suriname and Trinidad and Tobago who
inaugurated the Single Market on 30 January 2006.
The signing ceremonies on 30 January and 3 July 2006
do not mark the end of the Single Market process.
While we continue to fine-tune the implementation of
the Single market, we are at the same time focusing
increasingly on the Single Economy process so that
we may proudly proclaim our Community as the CARICOM
Single Market and Economy (CSME) in the not too
distant future. At the Twenty-Seventh Meeting of the
Conference of Heads of Government of the Caribbean
Community on 3-6 July 2006, Heads of Government
agreed that we must work assiduously towards the
establishment of the framework for the Single
Economy by 2008.
A few years ago, my predecessor, Mr. Byron Blake,
on an occasion similar to this, asked you to
“imagine a COTA Meeting in 2014”. In asking that
question, he was referring to the changes in
economic structures, economic policies and economic
management tools that would be required at that time
- a time when public revenue mobilization will
become more skewed towards direct taxation.
Today, I will not ask you to “imagine,” for the
future is already here. Our Single Market is in
place and the Single Economy is imminent. Our
economic structures are undergoing transformation -
the Services sector, characterized by new tertiary
activities, is beginning to overtake the traditional
goods sector; the shift from international trade
taxes to more endogenous forms of revenue
mobilization has begun, as many governments are
either in the process of installing or considering
the adoption of Value-Added Tax (VAT) systems.
Pursuit of joint production and trading strategies
along with the adoption of coordinated policies
represent the hallmark of the Singe Economy process.
Ladies and Gentlemen, the Single Market was
established through primarily governmental
legislative and administrative measures. The Single
Economy will require the active collaboration of all
stakeholders, both public and private, in the
adoption and implementation of coordinated policies
and measures. So, today, I ask you – the members of
COTA – to be an active collaborator in the Single
Economy process. Indeed, I challenge you to become
the initiators of modern and effective tax
administration measures supportive of the Single
Economy.
The CARICOM Single Economy is being pursued at a
time when our countries are facing challenges in our
efforts to create equitable societies. Reduced
earnings from our traditional exports, loss of
export markets, global competition to the major
services such as tourism and financial services,
coupled with further reductions in international
trade taxes arising from our liberalization efforts
(both unilateral and as a result of international
agreements to which we are, or may soon become,
signatories) are only some of the factors
conditioning our economic choices. At the same time,
our Governments are confronted with the demands for
the State to become more proactive in initiating the
necessary transformation and modernization of our
economies to accommodate the rising expectations of
our citizens. As the guardians of the public purse,
tax administrators are in a unique position to
support the mobilization of the resources required
to allow our Governments to effectively discharge
their responsibilities within the Community.
Article 44(1)(e) of the Revised Treaty of
Chaguaramas provides for the adoption by the
relevant decision-making Community Councils of
appropriate measures for the “convergence of
macro-economic performance and policies through the
coordination or harmonization of monetary and fiscal
policies, including, in particular, policies
relating to interest rates, exchange rates, tax
structures and national budgetary deficits”. Also,
Article 90 addresses the internal tax regime which
should be applied to goods of Community origin while
Article 52(6)(b) provides for “the avoidance of
double taxation” within the context of CARICOM
States undertaking to “establish and maintain
appropriate macroeconomic policies supportive of
efficient production within the Community”.
In keeping with these provisions, the CARICOM
Secretariat has commenced work on the preparation of
proposals towards the harmonization of the tax
systems within the Community. It is intended that
this work will build on previous initiatives such as
the proposals for the harmonization of corporate tax
structures, which have been on the agenda of
previous Technical Conferences of COTA, and for
which resolution is still outstanding. The best
practice principles implicit in Instruments such as
the Intra-CARICOM Double Taxation Agreement will
underpin any tax harmonization proposals which will
be placed before the Community.
Moreover, the Secretariat recognizes the need to
adopt a strategic incremental approach to the
harmonization of tax systems in the Community. In
this regard, the objective of tax harmonization
should be the achievement of a taxation system which
would improve the Community’s collective welfare
while taking into account the individual needs of
Member States. Such a harmonized taxation system
should result in an improved incentive structure for
economic activity and increased revenue mobilization
from a more efficient tax administration. The role
of tax administrators in the pursuit of these
objectives will therefore be critical in the effort
to modernize and improve the efficiency of the tax
systems in Member States, and the Community, in
general.
The CARICOM Council for Finance and Planning, at
its Fifth Meeting on 6 September 2001, established a
Working Group on Fiscal Policy Harmonization to
spearhead this exercise. It is my understanding that
COTA is represented on this body. It is my hope,
that COTA, through its representative, will be an
active participant in the activities of the Working
Group.
However, my vision for COTA does not end with
participation in the Working Group on Fiscal Policy
Harmonization. I am mindful of the foresight of the
Community’s then Standing Committee of Ministers of
Finance, implicit in the 1972 Standing Order which
established COTA, that this Body should be a
Standing Advisory Committee of the Standing
Committee of Ministers of Finance.
In our
restructured institutional arrangements for the
governance of the CSME, the Standing Committee of
Ministers of Finance has been replaced by the
Council for Finance and Planning (COFAP). The
Revised Treaty of Chaguaramas, at Article 14, gives
COFAP the responsibility to “promote and facilitate
the adoption of measures for fiscal and monetary
co-operation among the Member States, including the
establishment of mechanisms for payment
arrangements”.
Article 18 of the Revised Treaty also
makes provision for the appointment of ‘Bodies’ of
the Community. The existing Bodies of the Community
are – the Legal Affairs Committee, the Budget
Committee and the Committee of Central Bank
Governors. Articles 14 and 18 of the Revised Treaty
give the Committee of Central Bank Governors
specific responsibility to make recommendations in
its area of competence to COFAP. I see no reason why
COTA should not be given similar responsibility in
its area of competence. However, to make this a
reality, you must begin to conceptualize a role for
COTA within the framework of the CSME, particularly
the Single Economy.
We must begin to explore the
possibility of having COTA designated a Body of the
Community in accordance with Article 18 of the
Treaty. You will need to review your Constitution,
in particular “the objectives for which COTA is
established” in order to make you more proactive if
you were to discharge the responsibilities of a Body
of the Community. COTA could be a forum for
resolving problems associated with the harmonization
of tax systems in the Region.
As a Body of the Community, COTA could be
required to provide advice on tax policy and
administration issues to the relevant Councils,
namely the Council for Finance and Planning (COFAP)
and the Council for Trade and Economic Development (COTED).
These Councils have joint responsibility for
adopting appropriate measures for the harmonization
of, inter alia, policies relating to tax structures
and national budgetary deficits. Therefore, as the
Community moves towards adopting a tax harmonization
strategy, COTA could be expected to advise on issues
such as:
The tax treatment of Temporary Service
Providers – consultants, artisans;
The adoption of standardized systems and
procedures to allow for consistency in tax
administration and management;
The use of region-wide information technology
systems (particularly, software) by tax
administrations;
Modalities for standardized training of tax
administrators and sharing of scarce specialized
resources across the Community;
Joint execution of taxpayer assistance
programmes;
Institutionalization of information exchange
and sharing among tax administrations as a deterrent
to tax evasion, given the rise of cross-border
activities.
Indeed, your theme – Building Strong Economies
through Innovative Tax Policies and Administration –
signals your readiness to transform your Association
into an Advisory Body of the Community. COTA was
formally constituted here in Saint Lucia in 1971.
Perhaps, it is the right time and place to start the
process of transforming COTA. I stand ready to
provide my support to advance this initiative.
I understand that COTA operates within a clearly
defined Constitution that provides for arrangements
for collaboration and coordination of information
exchange, training and technical assistance and
advisory as well as research on taxation issues. I
also understand that COTA’s Constitution only
provides for direct tax administrators thereby
excluding other tax administrators. This limitation
needs to be addressed urgently, given the move by
several Member States towards the creation of
comprehensive tax administration agencies with
responsibility for the administration of both direct
and indirect taxes.
Finally, I urge you to undertake an immediate
review of your Constitution to determine whether the
stated objectives are adequate in the changing
regional tax administration environment and in
accord with the future role of COTA as a prospective
advisory Body of the Community. I also urge you to
take immediate steps to make any adjustments which
may be required. Time is of the essence.
In closing, I would like to convey warm greetings
from the Secretary-General of the Caribbean
Community and join him in wishing you fruitful and
constructive deliberations over the next few days.
THANK YOU.
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