The statement deals with the Board’s perspective on the protection of taxpayer information and what GRA is doing in that regard; the treatment of compliant and non-compliant taxpayers by the staff of GRA; conduct of the staff of GRA; and the general welfare of the staff of GRA.
Creation of Board
As you know, a new Governing Board was established in June of last year to execute the mandates expressed in the Revenue Authority Act regarding the approval of policy, monitoring the performance of the GRA and the discipline and control of the staff. We feel therefore as we are still in what could be regarded as the zone of transition between 2015 and the new year of 2016, it would be useful to share both the experience so far of the new Board and its thinking on the business of the GRA. While it may touch on issues of relevance to the annual report of the GRA, I am asking you not to interpret this statement as constituting such.
Service to Taxpayers and Staff
It might be an understatement to say that GRA is an organization that does not enjoy a good reputation among the general public of Guyana and in the Press. When we speak of an organization, we are essentially talking about the interrelationship between positions and functions and the persons who are required to carry out those functions. These relationships and people carry both structural power and relational power. The structures connect people to the work that is done in, and by, the organization and to the relationships that they have with co-workers and the customers or taxpayers that they serve. Over the years, these power structures were exhibited in various forms, including forms of mistreatment of staff and taxpayers.
One of the first things that the Board wants Guyanese to understand is that it recognized from the outset that it had to pay attention to the interests and concerns of the people that it serves. The Board, on behalf of the Executive Branch of government, serves both the taxpayers of Guyana and the staff of the GRA. We must respond to both sets of constituents with equal attentiveness. In seeking to do so, we gathered that there is a lack of trust, perhaps even lack of respect, between the GRA and taxpayers. This state of affairs is a recipe for disaster and fuel for taxpayer animosity and resistance, none of which is good for revenue collection.
The Board’s primary focus in 2016 is to work towards giving taxpayers confidence in the GRA and to continue gaining the confidence of the GRA staff and its preparedness to work constructively with taxpayers. In both instances, the Board recognizes that there is much work to do. With reference to giving taxpayers confidence in the GRA, we are moving in a new direction. Overlaying it all is the protection of taxpayers’ data. The Board expects GRA to treat the protection of taxpayers’ data with the utmost sanctity and to ensure that appropriate mechanisms are in place to achieve that goal.
Status of Policy
In that regard, as Chairman of the Board and Chairman of the Board’s Human Resource Committee that is tasked with personnel matters, I examined the policy with respect to the protection of taxpayers’ information and found gaps in the policy which needed to be addressed immediately. What we found was that the policy did not give sufficient reassurance of the soundness and completeness of the protection of taxpayers’ information, particularly in the case of staff members who were on a very long sojourn from the organization. This meant there was no confidence that all information about taxpayers was in the place that was considered the most secure. For me, this secure place refers to the authorized central storage and retrieval system or facilities of the GRA. The holding of information away from the official sites particularly when one is not expected or required to be using that information for an extended period of time does not constitute securing taxpayers’ data and information.
The Board is conscious that the GRA is perhaps the only public institution in this country that knows or is required to know all of a taxpayer’s financial business. Information is knowledge and knowledge is power. The knowledge is one-sided in favour of GRA and therefore gives GRA inordinate power over taxpayers. The Board further understands that that power is not to be used for anything other than revenue collection. It is not intended to embarrass, ridicule, frustrate, torment or politicize the legitimate economic, social or political aspirations of Guyanese taxpayers. You are required to give up virtually all of your privacy to GRA as a taxpayer. But it is important for you to know that, in return, GRA has no right giving up your privacy to anyone, unless it is required to do so in the public interest, and in accordance with the relevant laws. This is the power that you have which, limited as it is, must be protected at all times. Anyone who has the taxpayers’ interests at heart would have no difficulty seeing the reasonableness of such a position. Therefore, the Board appreciates the need to impose high standards for securing, gaining access to and sharing taxpayers’ information; and that is what the Board has moved to do. It requested GRA to prepare enhanced policies in this regard which are ready now for adoption. The Standard Operating Procedures (SOPs) for its implementation have also been developed and awaits final approval.
If that is the standard we must use then we cannot tolerate having among us those who are willing to ignore it or breach it. No one must believe that the laws of this country do not apply to him, her or any artificial persons, more so those of us who are entrusted with the duty and obligation of setting the policies and setting the example.
Property of Government
It is fundamentally important to understand too that taxpayers’ information that is given to the government is the property of the Government of Guyana and no one else. Therefore, when the government says give it up, you must give it up. The law also provides for a statute of limitation with respect to the retention and use of taxpayers’ information. We must be satisfied that all taxpayers’ information is where it should be at all times so that it could be subject to the full and proper implementation of the various statutes of limitation.
The Board intends to exercise little flexibility on this matter and anyone found with taxpayers’ information where it should not be will be fully investigated and will be made to face the full extent of the law if in violation of the policy.
Raison D’etre for GRA
Ladies and gentlemen, I think that it is important to remind you of the raison d’etre of the GRA, why the GRA exists. The only purpose of the GRA is to collect revenue so that the government can do the things that taxpayers want it to do for them. The Executive must create an enabling environment so that our personal, family and business aspirations can become reality in a way that brings us satisfaction. They must make us feel safe and they must make it possible for us to live in a clean and healthy environment. In addition to the needs of the Executive, revenues are needed for the other branches of government. The Legislative Branch needs it so that it could get money to perform its law-making and oversight roles. The Judicial Branch needs it to get money to help protect the rights of citizens. Collectively then, revenue collection is needed to protect our democracy and democratic rights, and help us to fulfil our ambitions. As taxpayers, we are all asked to make a contribution, through the tax system, to the defence of our democracy and the creation of a liveable environment. The GRA is given the special task of helping to put taxpayers of this country in a position to support and defend our democracy and to meet their various goals.
Revenue collection operates on a principle of voluntary compliance. Voluntary compliance implies giving information willingly or without pressure to those who must have it. The onus is on the taxpayers to demonstrate compliance. Guyanese are given that opportunity by the government and usually have over 470 days each year to comply fully. Voluntary compliance is of immense value to the organization and the country because it helps to reduce the cost of administering tax collection. Those taxpayers who comply voluntarily with the law have a legitimate expectation that they would be treated with courtesy and respect when they present themselves before the staff of GRA. Consequently, it is the Board’s view that GRA’s interface with the public must change.
Supporting those who voluntarily comply with their tax obligations goes beyond mere courtesies. It must encompass the provision of accurate and timely information to taxpayers. This means our staff must be knowledgeable and must have access to the technology that makes the delivery of the service effective and efficient. We will be looking at staff training as a matter of priority. Focus will be on areas of customer service, tax analysis, tax planning and policy, human resource management and legal services in order to make the taxpayer experience better. We will also be looking to ensure that GRA has the right type of technology application that can help to increase voluntary compliance while at the same time increasing the flexibility and comfort with which taxpayers are able to conduct their business. The GRA is currently pursuing e-services capability similar to that which obtains internationally. While we are aspiring to make that available for use during this year’s tax season, we are mindful of the unforeseen risks which may delay that process.
Among the initiatives being taken are giving employers the capability of submitting PAYE data of staff members electronically and implementing a Performance Management System for employees of the GRA. The implementation of the electronic PAYE system will yield important savings in time and cost within the organization. Additionally, the PMS will assist in strengthening staff capability through the evaluation process and hence the quality of service delivered to taxpayers.
While we remain ambitious and hopeful, we must also acknowledge the sad reality of tax non-compliance in Guyana. We took the time to examine some economic data over the period 2006 to 2014 to establish some preliminary estimates of the tax base. Our methodology relied in part on that used by the Bank of Guyana to establish the resource gap. We then relied on the definition of our gross domestic product (GDP) to which was added our import spending to get a true sense of our resource shortfall. The question that arose from the numbers that emerged was how could we spend so much on such little money? We looked in the usual places like borrowing, remittances from abroad and foreign investment and foreign aid for answers. This methodology is a very simple one and suffers from the effects of ignoring important behavioural variables. That the reconciling items could not help us fully reconcile our spending with the reported revenues, even after making room for unsold inventory, with our income nevertheless helped confirm for us that our tax base was ill-defined and distorted and was in need of urgent refinement. Consequently, another of our goals this year is to gain a more accurate measurement of our tax base for future tax planning.
Further, an inaccurate tax base leads to revenue losses. Revenue leaks through all of our tax structures. But, the ones that concern us most are the losses through self-employed income tax, property taxes, value-added taxes and import duties. One of the troubling things that we have seen so far is the inverse relationship between the total number of registered taxpayers and those paying taxes. In an economy that was growing at an average annual rate of 4.5 percent, the number of persons paying taxes was declining. We intend to study this phenomenon some more to understand the behaviour of these variables and to reverse this unconfirmed, yet troubling trend.
Our concern about non-compliance has led Board members to call for disaggregated data about tax collection. At the moment, the monitoring of tax performance is done at the level of the tax structure. We intend to disaggregate the data by sector, by industry, by regions and by important economic hubs or centres. At this particular point in time, we have begun to disaggregate the data by important economic hubs or centres. The work done so far excludes Georgetown which is by far the most important economic centre. The data covers Anna Regina, Bartica, Corriverton, Lethem, Linden, New Amsterdam, Ogle and Parika. What we see is of both interest and concern. Those eight economic centres are contributing only two percent to revenues. This is much as a surprise to me as it is to others. One would have thought that an area like Corriverton situated in Region 6 with its multi-sectoral economy and border trade would be making a larger contribution to tax revenues than G$1.3 billion and substantially more than an area like Linden which brings in an amount of G$1.1 billion in tax revenues on a much narrower economic base. One is surprised too that areas like Anna Regina and Bartica combined cannot do as well as or even better than the relatively depressed economic area of New Amsterdam.
It is under circumstances like these where revenue collection does not match observed levels of economic activity that GRA must use its enforcement authority. When tax collection reaches the stage of enforcement, demands of GRA become more onerous for the taxpayer. At this stage, one could expect some level of confrontation with taxpayers. This enforcement responsibility of GRA is demanded by laws governing revenue collection and is executed primarily by the Law Enforcement and Investigative Division, the Debt Management Division and the Tax Audit Division. Taxpayers must understand that GRA’s employees are required by law to enforce revenue laws where voluntary compliance is lacking. One therefore must not view GRA officers as villains for they are not. They are humans with an interest in success at their work like every other Guyanese.
At the same time, we understand how intimidated taxpayers can be by the power vested in GRA enforcement officers. Anxiety, desperation and inconvenience could all add up to a state of vulnerability that forces taxpayers into engaging in what they might believe are transactions of relief. Taxpayers who succumb to frustration and harassment and engage in illicit transactions are themselves breaking the law and expose themselves to prosecution. We are asking our officers to be measured and considerate, and to act always with the view of achieving the best outcome for taxpayers while protecting the interest of the government. We are also asking our enforcement officers to be mindful of the laws and avoid forcing taxpayers into compromising positions. As much as we expect the GRA management to stand behind its staff, the Board expects GRA officers to conduct themselves with the utmost professionalism and will exercise zero tolerance if that directive is ignored. It means that anyone found violating the Employee Code of Conduct will be dealt with condignly.
The Board remains concerned about the safety and welfare of the staff and will continue to pursue in 2016 efforts to find a new home for GRA’s staff in the shortest possible time. In the meanwhile, we have taken measures to ensure that the staff can work with minimal difficulty in its Camp Street location.
January 8, 2016