Raphael John-Lall

Econ­o­mist Dr Ronald Ramkissoon be­lieves that grant­i­ng too many tax amnesties can be counter pro­duc­tive and called on pri­vate and cor­po­rate cit­i­zens to be more “busi­nesslike” in how they meet their tax oblig­a­tions.

Giv­en the his­to­ry of poor com­pli­ance by tax­pay­ers in T&T, tax amnesties have been used by suc­ces­sive gov­ern­ments to nudge tax­pay­ers to pay their oblig­a­tions.

In March, the T&T Rev­enue Au­thor­i­ty (TTRA) chair­man, Nigel Ed­wards gave Guardian Me­dia da­ta which show that there is an es­ti­mat­ed $15 bil­lion in un­paid tax­es.

In 2011, un­der the Peo­ple’s Part­ner­ship Gov­ern­ment, then Fi­nance Min­is­ter Win­ston Dook­er­an re­vealed in Par­lia­ment that the tax amnesty at that time brought in $1.8 bil­lion.

“Tax amnesties can be use­ful at points in time, but used too of­ten, they negate the whole in­ten­tion, which is get­ting peo­ple to com­ply. You can be do­ing a dis­ser­vice as peo­ple will keep ex­pect­ing that there will be ex­ten­sions. What­ev­er con­tri­bu­tions that should be made by law, you have to in­sist that they make those con­tri­bu­tions, es­pe­cial­ly the ones where com­pa­nies deduct the Na­tion­al In­sur­ance (NIS) from their em­ploy­ees’ salaries...and we have been read­ing about com­pa­nies that do that but do not turn it over to the Na­tion­al In­sur­ance Board. I think that that is some­thing that should be tak­en very se­ri­ous­ly. I have not looked at the fig­ures but the au­thor­i­ties be­gin to get less and less and less from amnesties. It is some­thing that should not be a habit,” Ramkissoon told the Busi­ness Guardian.

He ad­vised cit­i­zens, both at the cor­po­rate and per­son­al lev­els, to be more ef­fi­cient in how they car­ry about their fi­nan­cial re­spon­si­bil­i­ties.

“As a so­ci­ety, we need to be much more busi­nesslike in the con­duct of our fi­nan­cial af­fairs. Es­pe­cial­ly in the house­holds, pri­vate sec­tor and at the Gov­ern­ment lev­el. We need to be far more pru­dent in the way that we con­sume, save and in­vest.”

In his bud­get pre­sen­ta­tion, Fi­nance Min­is­ter Colm Im­bert an­nounced a tax amnesty and Na­tion­al In­sur­ance Scheme amnesty, which will run from 1 Oc­to­ber 2024 to 31 De­cem­ber 2024.

“We do not ex­pect to give any fur­ther tax amnesties af­ter the TTRA is ful­ly up and run­ning, as we ex­pect much bet­ter com­pli­ance from all tax­pay­ers once the new arrange­ments for tax col­lec­tion are in place. Tax­pay­ers are there­fore urged to take ad­van­tage of these amnesties as they may not see them again,” Im­bert said.

“Tax amnesties over the years have proven to be a valu­able source of ad­di­tion­al rev­enue and have gen­er­at­ed bil­lions of dol­lars pay­ments. We do not wish to en­cour­age tax avoid­ance but now the Privy Coun­cil has ruled in favour of the Gov­ern­ment with re­gard to the con­sti­tu­tion­al­i­ty of the Rev­enue Au­thor­i­ty, it now al­lows us to move apace to op­er­a­tionalise this au­thor­i­ty. We will give taxR­pay­ers one last op­por­tu­ni­ty to put their house in or­der and pay up their out­stand­ing tax­es be­fore the TTRA is in full op­er­a­tion with­out be­ing sub­ject to penal­ties and in­ter­est,” said Im­bert.

The dead­line to pay the Prop­er­ty Tax was al­so ex­tend­ed to No­vem­ber 29.

In­ter­na­tion­al opin­ions

Econ­o­mists in­ter­na­tion­al­ly have de­bat­ed the pros and cons of tax amnesties.

An In­ter­na­tion­al Mon­e­tary Fund (IMF) pa­per pub­lished on Ju­ly 29, 2008 au­thored by Er­ic Le Borgne and Kather­ine Baer weighed in on the de­bate.

The ab­stract of the IMF pa­per stat­ed, “Tax amnesties re­main as pop­u­lar as ever as a tool for rais­ing rev­enue and in­creas­ing tax com­pli­ance. In­ter­na­tion­al ex­pe­ri­ence, how­ev­er, shows that the costs of tax amnesty pro­grammes of­ten ex­ceed the pro­grammes’ ben­e­fits. This pa­per weighs the ad­van­tages and dis­ad­van­tages of tax amnesties, draw­ing on re­sults from the the­o­ret­i­cal lit­er­a­ture, econo­met­ric ev­i­dence, and se­lect­ed coun­try and US state case stud­ies.

“The au­thors con­clude that ‘suc­cess­ful’ tax amnesties are the ex­cep­tion rather than the norm. Im­prove­ments in tax ad­min­is­tra­tion are the es­sen­tial in­gre­di­ent in ad­dress­ing the main prob­lems that tax amnesties seek to ad­dress. In­deed, the most suc­cess­ful amnesty pro­grammes re­ly on im­prov­ing the tax ad­min­is­tra­tion’s en­force­ment ca­pac­i­ty.”

Edgar Cas­tro and Car­los Scar­tasci­ni, who au­thored a pa­per for the In­ter Amer­i­can De­vel­op­ment Bank (IDB) in 2020, were not con­fi­dent that tax amnesties gen­er­at­ed the de­sired re­sults.

“The down­side of join­ing a tax amnesty is that peo­ple pro­cras­ti­nate on their own com­pli­ance and may set a bad ex­am­ple for their neigh­bours.”

Dook­er­an gave a brief re­sponse to the Sun­day Busi­ness Guardian, on his views on the lat­est tax amnesties. ”Amnesties are good strate­gies, if not used too fre­quent­ly and in­clude an in­cen­tive strat­e­gy to keep those who use it in the tax-pay­ing cat­e­go­ry, post-amnesty,” he said.

Prop­er­ty tax

Dur­ing the bud­get pre­sen­ta­tion, Im­bert al­so an­nounced the cre­ation of an on­line sys­tem to help peo­ple pay the res­i­den­tial Prop­er­ty Tax.

Ramkissoon agreed with the ex­ten­sion of the Prop­er­ty Tax dead­line for pay­ments and jus­ti­fied it by say­ing peo­ple ac­tu­al­ly want to pay it but tech­ni­cal and lo­gis­ti­cal chal­lenges, like not be­ing able to pay on­line, pre­vent­ed them from do­ing so.

“For me, the fact that peo­ple had dif­fi­cul­ties in ac­tu­al­ly pay­ing, peo­ple lin­ing up on the road, peo­ple want­i­ng to pay it but could not pay it and par­tic­u­lar­ly could not pay it on­line elec­tron­i­cal­ly, I think that was re­al­ly bad. I think it was quite in or­der to give peo­ple more time to pay. Hope­ful­ly, we would see the abil­i­ty to pay on on­line. It is fair to the tax-pay­ing com­mu­ni­ty that it is through no fault of theirs re­al­ly that they were not able to meet that dead­line. We need to move faster on the in­stru­ment of e-com­merce es­pe­cial­ly in ac­cess­ing Gov­ern­ment ser­vices.”

He al­so agreed with the Gov­ern­ment’s de­ci­sion to re­duce the amount that cit­i­zens will pay in prop­er­ty tax­es.

Im­bert not­ed that by March 2024, Gov­ern­ment low­ered the prop­er­ty tax rate to ease the fi­nan­cial bur­den on prop­er­ty own­ers.

The re­cent re­duc­tion in Prop­er­ty Tax, from three per cent to two per cent, will de­crease Gov­ern­ment rev­enue, with pro­jec­tions of $125 mil­lion for 2025, down from an an­tic­i­pat­ed $400 mil­lion for the pre­vi­ous fis­cal year of 2023/2024.

Ramkissoon said the Gov­ern­ment had no oth­er choice but to low­er the rate giv­en the eco­nom­ic dif­fi­cul­ties that cit­i­zens face.

“I al­so think that was a pos­i­tive move be­cause we have to recog­nise the cur­rent pres­sures that low­er in­come groups are fac­ing. We have to find a way to as­sist them through what is in­deed go­ing to be a dif­fi­cult time. But as well, we need some ed­u­ca­tion for low­er in­come peo­ple. We need some ed­u­ca­tion and train­ing about un­nec­es­sary con­sump­tion, the need for sav­ings and this is­sue of fi­nan­cial in­clu­sion. This is im­por­tant, es­pe­cial­ly for those at the low­er rung of our eco­nom­ic lad­der.”