Last week’s events including the impact of COVID-19 on world stock markets, the oil price drop plus inefficiencies in very bureaucratic public service systems all underscore the need for T&T to have a more efficient revenue collection system, Finance Minister Colm Imbert has said.
Imbert indicated this in the Senate yesterday while piloting legislation for the T&T Revenue Authority.
The bill seeks to establish an entity which will handle all assessment, collection, administration and enforcement of revenue laws. A Board of Management is proposed to manage the Authority including a Director-General.
Imbert stressed the TTRA will be driven by its management only. The bill requires Opposition/Independent senators’ support for passage.
Citing the need for a tighter revenue collection system, Imbert noted the effect of COVID-19 issues including causing demands in commodity markets. He also pointed to last week’s complaints by businessmen about new Customs procedures for importation of supplies. The fact that supplies were coming in without Customs declaration underscored the need to modernise the system, he added, saying the system still has high corruption practices, poor customer relations and other issues.
Imbert said he’s meeting couriers involved in the businessmen’s Customs matter today. But having no restriction on imports isn’t appropriate especially with scrutiny on T&T by the European Union, Financial Action Task Force and Global Forum, he added. Imbert said terrorists for instance used to send money to finance terrorism activities via wire service transfers.
“But now once the money is over $1,000 you have to report it, therefore we must have a modern Inland Revenue – we can’t have a closed-door and we can’t be all ‘open door’,” he said.
He said multiple governments in the last 20 years tried to change the system. But he said the Opposition’s call to reform existing systems with the current structure was “pie in the sky.” He said the UNC fully understands it can’t be done like that since they had problems on similar issues – concerning Civil Aviation – and had to detach it from the Works Ministry and convert it into an independent Authority.
Imbert added there are hundreds of vacancies in BIR and Customs and 50 per cent are in critical areas, “Every year I budget to fill these vacancies and we can’t since it’s up to the Personnel Department which moves at its own pace. “
Imbert said 60 countries are using the Revenue Authority format as it allows timely VAT/tax collection. In 2016 the International Monetary Fund (Fiscal Division) found gaps in collection – of five per cent of GDP- where approximately $4 billion wasn’t collected due to enforcement problems. Imbert also cited the IMF’s Tax Administrative Diagnostic Assessment Tool 2017 report where out of a listing of 28, T&T got 18 “D” ratings and seven “Cs”. Issues listed included on customer relations, enforcement and other matters. While there’s been some improvement he added many inefficiencies still exist due to very bureaucratic public service systems.
“So we decided the only way to go is the way 60 other countries did – with a Revenue Authority – especially at this time when oil prices collapsed. We feel we must bite the bullet now and set up a TTRA,” he said.