The Fiscal Enactments (Amendment) Act which was passed by the National Assembly last week breaks new ground in many areas. It sets the foundation for the application of presumptive taxation on the self-employed who have over the years populated the category of the hard-to-tax. The self-employed, from all of the available data, have not paid their fair share of taxes and therefore any attempt to rectify this is welcome. By its very nature, the presumptive tax admits that tax authorities have been unable to collect from this category and that these persons have not been voluntarily paying an equitable share of the tax burden.

The regulations to accompany this Act will be crucial to the successful application of the law. The Act sets out in general terms what criteria will be applied in arriving at presumptive taxation such as the size of the business premises, number of employees, assets employed in the business, education, training, years in practice and the salaries of comparably employed persons. These have to be applied transparently and across the board by the Inland Revenue section of the Guyana Revenue Authority (GRA).

With the increasing responsibilities of the GRA as a result of this act it is disappointing that it remains largely inaccessible to public scrutiny even taking account of the need for confidentiality in the many sensitive areas over which it has jurisdiction. Since the merger of the Customs and Excise Department and the Inland Revenue Department several years ago to form the GRA, none of its annual reports has been laid in the public domain. This inscrutability has led to two distinct problems: first, the public is unable to judge for itself whether the decision by the government to meld the two main revenue bodies has resulted in the significant expected increases in revenue. While there have been revenue increases, might these still not have been registered if the two entities were still separate? Therefore, has the merger heightened the revenues expected as a result of improved efficiency, staff reductions and systemic changes? Second, the supposedly expanding-taxed public has little day-to-day contact with the agency except for the obligatory returns which have to be submitted each year.

One would have expected that as its merged functions were streamlined that the GRA would have been “on the road” so to speak, reaching out to those who have avoided paying taxes and laying the groundwork for the expanded functions it is now expected to take on. Sadly, this has been lacking and far from being accessible, the GRA has not had much of a public profile. The situation has been particularly unacceptable in relation to the Customs and Trade Administration (CTA). Following the startling exchanges between the Head of the CTA, Lambert Marks, and the former head of the GRA, Edgar Heyligar, the CTA head has not been available to any media house on customs matters such as the smuggling of fuel. This is completely unsatisfactory as it obstructs public communication on vital issues. The Customs authority must have an open relationship with the media and we hope that this is an area that the incoming GRA head will address in addition to fostering greater interaction with the public.

Other areas of the sweeping tax reform Act have attracted attention including the new fees for practice certificates for professionals. The current $10,000 is ridiculously low and the general consensus following the amendments at the level of the select committee of Parliament is that the new fees between $25,000 to $250,000 are reasonable. Unfortunately, these fees are destined to be passed on to the hapless consumer.

Of worry are the 5% and 10% taxes that will be added on the value of services provided by a range of professionals. First, it will be a significant additional tax burden on the already cash-strapped consumer and continues a trend where post-budget taxes are introduced under the guise of reform when these could have been unveiled and catered for in the annual budgetary projections. Come September 1, how will this 5-10% services tax impact on Guyanese when many of them have not benefited from salary increases of that magnitude and have had to absorb increased costs such as this year’s telephone calls tax.

Will this services tax be applied across-the-board by all of the professionals that it relates to? Or will there be two economies: one where it is applied - perhaps on persons who are less able to afford it - and a parallel one where it is not?

Of greater worry is whether the same GRA which has had a torrid time trying to collect taxes from these same professionals will be up to the task of managing this new impost. Might this tax not end up being pocketed by some of these professionals instead of being paid over to the government? The public awaits clear and detailed information from the GRA on how it will set about cajoling these professionals to charge the tax, collect it, pay it over to the Treasury and maintain adequate paperwork. Such a system seems quite alien to the heavily-ingrained culture of tax evasion and poor administration.

Elsewhere in the Act, the restricting of circumstances in which tax remissions are granted is most welcome. Too much discretion existed in the past and there were undoubtedly abuses. Whether the system will work in the manner envisaged is left to be seen but what is also heartening is the defining of a framework meant to attract investors in certain businesses to depressed regions of the country.

There is much in this Act that is positive. The government and the GRA now have to show that it is well within their capabilities to administer it.