Tax Administrations are currently involved in a process of continuous improvement, reengineering and modernization of their tax systems, but they must have the relevant legislative framework to make this possible.

In this ever – changing world or in this age of globalization, one’s tax system needs to be prepared to respond effectively to changing economic circumstances.

The mission of a modern Tax Administration is to apply the tax system at the lowest possible cost, serve taxpayers by continuously improving the quality of its services and achieve the highest possible level of public trust in its integrity, effectiveness and fairness.

The fundamental objectives of the Tax Administration are to facilitate the citizens compliance with tax obligations and combat evasion in all its modalities. To achieve these objectives, the Administration depends on exogenous factors, such as the adaptation of the rules that provide for the establishment of taxes and the legal framework for carrying out its functions but it also depends on the existence of attributes which must be developed by the very administration.

In any modern tax Administration Laws would have to be passed, but before this is done consultation with the public (taxpayers) is very important. Gone are the days when Parliament pass a tax law, and then the Administrator execute that law without any input from the Administration or the very taxpayers who are expected to comply with the law.

However, things are done differently now. When Antigua introduced the Personal Income Tax in April, 2005 and the Antigua and Barbuda Sales Tax in January, 2007, the Ministry of Finance had a team headed by the Minister of Finance who held town hall meetings all over the country, so taxpayers could air their views and also be informed of what to expect. This made the implementation of the Act easier to everyone.

Study shows that in England the Paymaster General announced during the Second Reading of the Commissioners for Revenue and Customs (CRC) Bill a major review, involving wide consultation, of the powers, deterrents and safeguards that will underpin the new revenue Department, HM Revenue and Customs (HMRC). It set out its broad scope as including “the requirement to provide information, interest and surcharge regimes for late payment, and penalties for non compliance and rights of appeal and the modern regulations and practices that HMRC will need to be a high – performing 21st – century tax administration.

The aim of the review was to provide a framework of law and practice for HMRC that supports the Government’s objectives of a tax system, that is fair and better adapted to the needs of customers. It will consider the scope for aligning and rationalizing existing powers so as to make it easier for individuals and businesses to comply with their tax obligations and receive the tax credits to which they are entitled. It will also consider how best to obtain the information needed for better risk assessment and for better – targeted compliance activities.

The review and consultation will be an important element in creating a modern tax administration that is in tune with the needs of taxpayers and with a modern global and technology – based economy.

The document begins the consultation. It sets out the areas to be covered by the review, the form and broad timetable envisaged for the consultation process, the key objectives for the new framework and the principles that it is intended should inform its design. It also asks for comments on key strategic questions to open up a discussion on how best these objectives can be met.

In particular consultation will cover the law and practice that governs.

1) The information that is provided on a routine basis, for example in registering with HMRC or in tax returns, and is used to calculate the amount due or payable, to assess risks of non – compliance and for other purposes such as forecasting tax receipts of providing targeted support.

2) The powers to obtain additional information and to make assessments in the course of enquiries and inspections into the amounts of tax due, to obtain evidence where an offence is suspected and to settle the tax and any interest and penalties which is ultimately due.

3) The financial and other sanctions that can be applied in cases where complete and accurate information is not provided, the appropriate amount of tax is not paid at the right time, there is a need to deter – non – compliance or to ensure that those who break the rules do not obtain an unfair benefit.

4) The restrictions and appeal rights that apply to the use of these powers and provide an essential safeguard for taxpayers.

These are important issues that potentially affect all individuals and businesses, and the government believes that everybody should have a chance to make their views known.

The creation of HMRC provides the opportunity to achieve a step change in the approach to tax. The aim will be to introduce better customer focus, greater effectiveness and greater efficiency into the system, and as part of its Public Services Agreement it has already been set specific objectives for improvements in these areas.

Improved use of information will be central to achieving all these and this needs to be underpinned by a legal framework with appropriate checks and balances.

Closer at home, the region is preparing to meet the challenges of the CARICOM Single Market and Economy (CSME), it is therefore imperative that the Governments then strengthen its tax systems. In order to do this the Governments should provide a framework of modern laws and principles for their Tax Administrations that will support their objectives of a tax system that is fair and better adapted to the needs of the customers.

In a brochure captioned “The Taxpayer’s Charter”, it is expected that the Revenue Departments (or Authorities) provide an efficient service in settling tax matters promptly and accurately and by keeping private matters strictly confidential.

National and Regional Governments also need to simplify the laws and practices to encourage voluntary compliance in order to protect the revenue base. There should be a penalty regime that reflects risks which has an effective deterrent effect and assures the compliant that those who break the rules do not benefit.

It cannot be over-emphasized that the Region needs to build an efficient tax administration towards promoting national and regional development with concentration in having an effective legislative framework. There needs to be a redesigning of procedures and of the legal framework to increase compliance and enforcement, including setting out of taxpayers’ rights, obligations and penalties in a single statute. In order to do this, co-ordinate an harmonization of tax policies across the region, co-ordinate regional training and Information Technology development for tax administration and promote best practices among tax administrations.

Deterrent measures should adequately reflect the seriousness of any contravention, the risk to the Department and the circumstances of those they penalize. The Tax Administrations should seek to improve the confidentiality of information lawfully, including complying with the safeguards for taxpayers’ secrecy.

It should be concluded that the main purpose of the legislative framework – modernizing Powers, Deterrents and safeguard is to increase Governments revenue which is needed to help with promoting National and Regional Development.