Revenue shortfall tops $4B -- but Sattaur, Chue upbeat about recouping collections
by Gitanjali Singh
There is an immediate shortfall in revenue in excess of $4 billion but this figure is expected to be reduced substantially when the backlog of taxes and customs duties are collected. However there is no guarantee that the current revenue target for the year of $34.9 billion will be met given the disruption in economic activities caused by the 55-day public service strike. However, Commissioner of Inland Revenue, Kurshid Sattaur, and Comptroller of Customs, Clarence Chue, both feel that if there is a sudden burst of economic activity in the last half of the year, the target could be met. At the end of April, both agencies had surpassed their targets and indications then had pointed to that trend continuing. However, their half-year targets were not met because of the strike which effectively crippled the operations at both departments. The Customs and Excise Department had a half year target of some $7 billion, at an average monthly collection of $1.2 billion per month. But as of Tuesday, total collections by the department for the year were $4.66 billion. At the end of April, the department had raked in $55 million more in collections over the previous year's figure of $4.4 billion. The Inland Revenue Department, at the end of April had raked in $5.6 billion, some $300 million above its target and almost $1 billion more than the previous year's collections for that period. However, the half-year target of $7.7 billion could not be met because returns and payments were blocked or in the system to be cleared. "Had the trends of earlier in the year continued, we would have been some $500 million above our target," Sattaur stated on Wednesday. The department is now taking stock of the returns not registered and Sattaur noted that April 30, a major payment date for the department had to be bypassed because of the strike. However, Sattaur is not daunted about the woeful projections being made in some quarters about revenue collections, given the impact of the strike. He argues that many of the persons who have been seen commenting on their revenue losses are not "honest" in their tax returns and given this situation, the overall picture would not be that bad. "The trend from the first four months of this year shows that the situation is not likely to be unsalvageable," Sattaur stated. He pointed out that the banks would have already made deductions on interest and for this year, that will yield $1 billion. He pointed out that most public servants still fall under the income tax threshold and would not be making Pay As You Earn contributions. Corporate taxes, he also noted, are paid based on the previous year's returns as no one can unilaterally make adjustments in their payments. For the first quarter, corporate taxes were $1 billion more than the previous year's figure. And vendors and taxi drivers among others complaining of loss of income, are not in the tax net, the commissioner stated. As to the effects of the blockade on imports, Sattaur noted that the cost of this was passed on to consumers in increased prices. "If everyone puts their act together and not use any unjustified excuses, we can recoup the losses, keep the current revenue payment on track and improve on it even," Sattaur stated. Sattaur also warned that all vehicles purchased during the strike and not registered should be registered within two weeks or all trade places will be withdrawn and suspended. He also warned that all taxes deducted at source should be remitted to the department by the first week of July or they will be faced with a hefty interest charge. All self employed persons including mini-bus, shop operators and barbers, as well as those who rent property are warned to pay up or face a 45 per cent interest for the first year and 50 per cent interest on unpaid balances each year after that. The commissioner is advising anyone who has difficulty in making these payments to visit the department. Sattaur said even though the Revenue Authority was stalled in court, he would be moving to implement some of the recommendations of the Latin American Tax Administration (CIAT) consultants on improving efficiency in revenue collections. His department is operating with just below 160 staff members, when it needs 420. The consultants recommended staff improvement, operationalising special units, improving the functions in some areas and disciplinary action, among other areas. But Sattaur said these recommendations have to be carefully timed in their implementation. The commissioner also deplored the actions of some foreign trading companies operating here who deduct PAYE from employees but do not do it within the regulations. He is calling on the public to bring such cases to light so that the department can act on them. But despite the setbacks, Sattaur is hoping that the bad blood in the society can be put aside and there can be a united effort by people to pay their taxes so that the economy can pick up. "The climate the strike has left in its wake is not too conducive... let us all rally to the cause and get the revenue in," said Sattaur, challenging persons to be honourable and pay their fair taxes. Chue also reported that there was a number of cheques in the system to be cleared and said in a few days, he should be in a position to give a definite figure on the Customs Department's collections. The department is working overtime and has already cleared about 200 containers from city wharves, raking in $208 million in revenue so far. It has another 200 to clear and anticipates that containers which were rerouted from Port Georgetown will return. Chue said he expected about 300 more containers coming in soon. Nevertheless, because the strike put a crimp on import and exports, Chue said there will be a loss to the revenue stream because of the gap when no orders would have been placed. Whether the target of the department would be met, Chue said, depended on the state of the economy in the coming months. The Customs Department will also resuscitate its campaign against smuggling which halted with the strike.
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