Scrapping the T&T Revenue Authority (TTRA) in seven weeks without dealing with the major issues within the public service was not the road to go down.
That’s according to former finance minister Karen Nunez-Tesheira as she spoke during CNC3’s Mid-Year Budget Review panel discussion last Wednesday.
She questioned the urgency of repealing the TTRA without dealing with the issues at the Board of Inland Revenue and Customs.
“A major issue is the public service. We’ve been talking about public service reform since the deceased former Minister of Public Administration Gordon Draper’s time (2003). The issue with the public service is the security of tenure. The promotion, discipline, meritocracy rather than seniority, all those factors play into how the Revenue Authority, the Board of Inland Revenue, as it is known, and Customs have operated.”
“Draper did a report many years ago, identifying the inefficiencies. These are driven by human nature. And so, I can’t see if you have not addressed the public service issues and dealt with reform in the public service, that putting these people back into the public service doesn’t seem to make sense,” Nunez-Tesheria pointed out.
Nunez-Tesheira said when the TTRA matter went to the Privy Council, Lady Simler held that since section 9 of the Constitution was meant to protect public officers and the public from improper political pressure, any separate statutory body had to be “genuinely independent and not a device or a sham,” and there must be adequate and effective safeguards for workers to protect them from political interference by the executive.
Nunez-Tesheria said Lady Simler was also satisfied that there were enough checks and balances built into the system that the question of executive overreach and executive interference did not arise. That is why the constitutional protection of the service commission exist and she was satisfied that there was no such threat.
“So given the issue of the public service, given the fact that she took a position up to last year, I cannot see rational or shutting down the Revenue Authority.”
Also speaking on the issue was American Chamber of T&T (Amcham T&T) chief executive officer Nirad Tewarie, who said the Chamber supported the TTRA and thought it would provide a better structure in which to work.
“I’ve been around long enough, from a journalist to being in chambers for almost two decades now, to know that the structure isn’t as important as the execution and the intent. The Chamber has been in meetings, facilitated by the Ministry of Finance with the agency responsible for revenue collection within the International Monetary Fund (IMF).
“They have said revenue authorities work, but so too do inland revenue divisions that are properly run. So the goal has to be to widen the tax net first, right. And by widening the tax net, I mean, bringing more people into the tax net,” Tewarie outlined.
He noted that Amcham T&T has been suggesting to every minister who would listen, that there is one simple thing that they could do to start increasing revenue within a month. Tewarie said the Government needs to take its own GIS data, and such data generated by the private sector. That would tell you where everybody and everything is located from professional services people to small businesses to large businesses.
“Overlay it, start with a region, start with an electoral district if you want, because that’s how our geographic regions are. And, and overlay it and see how many taxpayers you have, and how many people are not in the tax net. What you do is start widening the net. And you could do that in a non-punitive manner. You could say that we’re not going after you. If you come in within one year, we’re not going after you for back taxes, if your taxes are under a certain threshold,” the chamber executive highlighted.
He said with this approach, while the government would not get to $10 billion, there can be an increase of $1 billion to $4 billion in one year.
“It is about looking at where are the deficiencies in the Inland Revenue. The decision has been made, nothing we say here is going to change it, as the decision has been made. I believe look at the inefficiencies in the Inland Revenue Division. Make sure that they have enough people, the right technology, and the right mandates and empower the people who are in positions of leadership to hold others accountable,” he emphasised.
Jumping in on the topic, economist Dr Justin Ram indicated that he was neither here nor there with how the government goes about collecting the taxes. What he is more concerned with is whether it’s easy to pay taxes and whether the taxes are being paid efficiently.
“What I would like to say to the Government is try to improve the overall local production within this economy to import less and to perhaps export more. What are the types of incentives that are required there? I think we have to look at using the fiscal regime to encourage investment in production and perhaps penalise the consumption of final imports. I think that’s what we need to do,” Ram said. Speaking from Barbados, Ram noted that there is a very low rate of corporation tax in that country.
“That means there’s very little incentive to try to avoid paying taxes. These are just some of the things that I think the government needs to look at,” Ram explained.
He suggested that instead of focussing on whether to abolish the TTRA or not, focus more on how the government can make paying taxes more efficient and have a tax and fiscal regime that is conducive to investment and more local production.
And economist Amrita Deonarine noted that the model proposed and passed with the now-repealed T&T Revenue Authority was not so much a semi-autonomous revenue authority, but rather a hybrid model.
“It was very much similar to, I believe, it’s the Estonia model of a revenue authority. What ended up happening is that although the Board of Inland Revenue ended up being delinked from the Public Service Commission, we ended up in a situation where the Enforcement Division, which is where the Customs and Excise Division ended up in, was not delinked from the Public Service Commission. Much of the findings of the Tax Administration Diagnostic Assessment Report by Caribbean Regional Technical Assistance Centre (CARTAC) would have pointed out a lot of systematic issues that were people-driven,” Deonarine added.