IRD racks up $170m interest bill

Edmond Campbell, Senior Staff Reporter

EXECUTIVES FROM the Inland Revenue Department (IRD) yesterday admitted that the agency accumulated interest payments to taxpayers amounting to more than $170 million, a revelation that triggered a sharp rebuke from some members of Parliament's Public Accounts Committee (PAC).

Auditor General Pamela Monroe Ellis told the committee in Gordon House yesterday that IRD's delay in paying refunds to taxpayers resulted in outstanding interest amounting to $173.6 million. This represents claims of more than 3,500 taxpayers.

Monroe Ellis divulged that, in one case, the amount to be refunded to a taxpayer should have been $1.1 million. However, she said this was allowed to accumulate over a six-year period and the IRD had to refund the taxpayer an additional $5.3 million in interest payment.

Matter untenable

Under tax law, refunds to taxpayers that are outstanding after three months attract interest at a rate of 2.5 per cent. This represents approximately 34 per cent per annum when compounded.

Committee member and deputy speaker Marisa Dalrymple Philibert said the matter was untenable.

"It is a matter where we are incurring cost on government, which we don't have, and you are crippling some businesses at the same time," she lamented.

"It's inequitable. It benefits neither the government nor the taxpayer."

Great inconvenience

Dalrymple Philibert argued that it appeared the taxpayer who obeyed the law and makes payments on time was the one who suffered the greatest inconvenience.

Her colleague, Andrew Gallimore, contended that while the revenue services carried out its rigorous drive to collect taxes, it should at the same time exercise a similar zeal in settling outstanding amounts owed to taxpayers.

"If it's fair for you to impose a penalty on them (taxpayers), it must be fair for you to incur a penalty when you are not fair to them," he said.

Acting Commissioner of the IRD, Rosalie Brown, and Financial Secretary Dr Wesley Hughes told the committee that a major challenge faced by the department was the inability to make immediate refunds to taxpayers.

However, Dr Hughes said an "explicit part of the programme with the International Monetary Fund" was to reduce Government arrears.

He said the ministry was working assiduously to ensure that the arrears did not increase.