EDITORIAL: The other side of tax delinquency

High-profile taxpayers have recently been on the receiving end of aggressive efforts, including naming and shaming and asset seizure, as the Government moves to collect outstanding amounts. And it seems that no one is immune, as the long arm of the law seeks to reach into the pockets of delinquents and also grab their visible assets.

The stories are adding up, and the cases include celebrity sports figures, businessmen, entertainers, those who are politically connected, media and other professionals. In the world of criminal prosecutions, generally, an individual is deemed innocent until proven guilty; however, when it comes to tax cases, the individual is often considered guilty until he can prove his innocence.

This focus on tax delinquency, including media coverage of the tax-enforcement team's raids on homes and businesses, is often applauded by bystanders who demand that everyone pay his fair share and that tax cheats be exposed. The idea of public embarrassment is being employed more and more by the tax administrators, obviously to send a message to other tax dodgers. And the Government has officially declared war on tax cheats by inviting citizens to take the moral high ground and blow the whistle on cheats by calling an information hotline.

In the spirit of transparency, it would be interesting to find out whether the tips received so far have been more substantial than vindictive, and whether or not rewards have been paid out for the information received.

Although the estimates vary widely, and it is likely that some debt will be written off as being uncollectible, there is every indication that significant sums of corporate, property and other taxes remain uncollected year after year.

Be responsible

This is one reason the economy is haemorrhaging, and the country is unable to properly fund education and job training for the growing thousands of unskilled persons, or pay civil servants, fix roads and bridges and improve health care. It really comes down to the matter of input and output, and we are unapologetic that persons must face up to their responsibility and pay their taxes.

But there is another side to the income tax story that is not being told to the nation. It relates to the matter of tax refunds. Self-employed persons and financial institutions, especially those whose business involves withholding taxes on investments and savings, are owed vast sums in unrefunded taxes.

When there are delays in paying taxes, the revenue department applies penalties and interest. However, the same rule does not seem to apply to the tax department. Taxpayers are owed millions in refunds, they are never paid on time, if at all, and no interest or penalty is added. In effect, the taxpayer is being forced to make an interest-free loan to the tax department.

How can the recovery of businesses be hastened if Government continues to hold on to corporate refunds? What about interest on refunds? Who will penalise the tax department for its delinquency? We suggest that no individual or corporate entity would want to take that step for fear of reprisals by the tax department.

There are broad principles at the heart of tax collection and administration, among them fairness and equity. The revenue department has lost moral ground because of its breach of the Charter of Rights concerning expropriation of private property. Tax cheats might refrain from dishonest actions such as under-reporting their income and taking other evasive methods if they felt confident that refunds would be forthcoming when they are due.

The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.