Untitled

THERE IS LAW….. AND THERE IS EQUITY

A couple of media houses have been asking whether the government is not entitled to "garnishee" in order to collect taxes owed to it by citizens. The answer is "yes". Inland Revenue Division (IRD) insists that it acts under the law.

But it is also the law that the law should equitably and reasonably be applied. This is where the conduct of some IRD officials is tainted and infected - perhaps thanks to the pressure exerted upon them to collect at any cost.

TIM-TIM PERSPECTIVE
Let us put the matter in its Tim-Tim perspective. Dominica reminds me of Alice in Wonderland.

Poor Alice is already hopelessly lost when she comes to a network of cross-roads. She asks a character which road she should take. "Where do you want to go?" he asks.

"I do not know" she admits. "Any place".

"If you do not know where you are going, and you want to go anyplace, then it does not matter which road you take. Take any road!"

We took decades tying ourselves in a tight fiscal knot. We are now seeking an instant solution. Messianic solution, there is none; so the IRD's current road cannot possibly resolve the crisis.

COMPTROLLER'S REPRESENTATIONS
During tax week, in February 2002, the Comptroller IRD, made the following representations, publicly, on national radio:

IRD would consider an offset in cases where government owes the taxpayer.
Sixty per cent (60%) of the recorded liability of the private sector to IRD was self-created, by means of default assessments, and it included penalties and interest.
There were those who did not pay their fair share of taxes but who transferred assets to Miami and elsewhere.

THE LAST POINT FIRST
    I asked the Comptroller why did IRD not go after those who improperly held their resources abroad. "We are going after them," he replied. To date, some people question how many bank accounts in Miami IRD has the capacity or the will to review and to touch.
NOT PAUPERS, BUT NOT MEN WITH MEANS
    By international standards most of the women and men doing business here operate small and micro businesses. They may not be paupers, but neither are they men with means.
    The government is the biggest delinquent debtor in this country. Because the government cannot pay Ti Chika, and cannot pay its debt to the Company which owes Ti Chika….and so on…the domino effect is massive.
    It is not deliberate policy of government. It is an unintended consequence. But the government's inability to pay throws the finances of materially everybody else into chaos.
WELL ORGANIZED FOR BANKRUPTCY
    That unintended consequence makes the country somewhat too well-organized for bankruptcy. In this environment, a brand new year dawns and tax returns must be filed. The point being made is that the government should offset its debt to Ti Chika before stealing the small savings that Ti Chika prudently made over the years.
SELF- CREATED DEBT
    What does that mean?
    Sometimes a tax-payer may fail to file or may fail to answer IRD queries on time. This is wrong; so IRD may exercise its right to assess in default, and in keeping with its best judgement.
    IRD's best judgement tends generally towards some outrageous fantasy. But, sometimes it works. The tax-payer may produce accounts and file what is in keeping with economic reality and with the facts, as distinct from IRD's frolic.
    IRD for decades have used such accounts to review its assessments; subject always to its rights to query, and challenge… and so on.
    These days, some unreasonable people at IRD are insisting that the taxpayer must pay the assessed amount - however faulty the derivation - and that the taxpayer should query after. Most times, the taxpayer does not have the cash to pay the tax liability that exists only because IRD says so. Even assuming there was money there to pay it, IRD and government does not have the money to refund it when IRD, years later, should determine that its assessment was unreasonable.
    IRD says, of course, "we are acting within the law." But apartheid was once within the law; as was slavery. And when those systems were declared abolished, there was compensation for slave-owners and none for the slaves. In other words, some laws are bad laws. So, if it becomes your sad and demoniac duty to administer a law that is bad in part or in whole, you ought not to adopt a vindictive or insensitive attitude.
    The point is that IRD should not be permitted to disregard the reasonable precedents that IRD itself has set over the years, simply because the government is "broke".
SENSE COMMON OR UNCOMMON
    It is generally accepted that the term commonsense is a misnomer: commonsense is not common enough. Good sense should tell us:-

That even when you can justifiably take savings of your citizens from the bank, you discourage savings in the local financial institutions. You encourage the flight of savings to outside places.
The situation is exacerbated where you owe them money and you take their money without paying them what you owe them. The principle of offset is common in the neighbourhood - notably in Antigua and in the Netherland Antilles.
If 60% of the $44 million owing in taxes is created by IRD itself (Authority…Comptroller of Inland Revenue) then a very significant portion of that is not collectible. I estimated that one half may be uncollectible.
DIVINE TRUTH
    Yet, we tell the IMF/World Bank that the (gross) amount is owing without making provision for about 50% which is doubtful of collection. Once the $44million gets into the reports or dispatches of institutions such as IMF/World Bank, that figure is ascribed the status of divine truth and revelation. They will probably send IRD to collect it as a condition for some modicum of aid.
    By the way, even if IRD could make a liar of me, and could collect everything that is deemed to be owing, long before the end of 2002, other things being equal, government would still not be able to pay salaries.
    The fiscal gap cannot be bridged only by cash inflows. We must cut on recurrent expenditure while becoming more productive. Government cannot play Alice in that regard. It must light a flambeau, at least, and show the way forward. It can begin by cutting loose the party millstones which the country cannot afford.