Last Updated on Saturday, 6 May 2017, 7:40 by Denis Chabrol
by GHK Lall
Tax has to be among the most hated words in this country. It ranks right up there among the some real detestable things and people. Not surprisingly, the earlier announcement of a flurry of taxes has brought tears (some onion induced); terrors (on potential exposures); and tumult (what new dispensation?) over being called upon to pay. As I look at all of this, I seek to segregate the emotional from the sometimes comical, the usual criminal, and the almost always fantastical.
To begin with, I come from an environment where the effective personal tax rate ended up over forty percent, and which covered federal, state, and city taxes. Sales tax represented an additional eight percent of charges. So there is both context and history at a personal level. The result: grin and bear. Pay too. Complain as much as the heart desires, but pay. For the IRS is one of the most feared institutions over there.
Back at the local level here, there were taxes, but these were honored in full mainly by the poor. The loud criers of today also paid something. But, when examined closely, they paid at their own rate, at their own convenience, to their own people, and for their own benefit. The taxes that the pretenders and bigshots paid were hidden and whimsical. Whatever official tax (and returns) that was deigned to be handed over was at their discretion and negotiated. It is cheaper to pay the tolls to a crooked public official than to hand over the real number due to the treasury. The corrupt exchanges (token taxes paid) are a mere fraction of what is really due. There is profiting there, profiting on the VAT and NIS collected and not disbursed to the government, and profiting still again from the flush markup tacked on to the final product offered to the public. These are among the people agitating and crying the shrillest; those who made a killing and converted fraud into a science.
But there is still another treasure chest that could be part of the tapestry of riches reaped in this society. If money laundering is involved (and when is it not?) this inflates further undeclared earnings that only see daylight in profligate spending and conspicuous consumption. Those who ponder about the slowed and slowing economy (lackluster demand) need not look any deeper.
Now for the first time in recent memory, the commercial kimono has been parted. Adam Smith did inculcate that business of an invisible hand at work; except that in the Guyanese case it is very visible and has a North American grip. A lot of suspected nakedness and vulnerability have been exposed. Neither is endearing. Meanwhile, the paper patriots, all recently gaudily prosperous, but crookedly so, are screaming. This leads to clearer identification, as it cuts through the financial subterfuges and transparent camouflages. Implementation and collection follow; save that today it is the government doing most of the collecting. My condolences are reserved for the strapped poor who will be saddled with the pass-through charges and VAT.
In terms of the latter, everybody knows about different sets of books (somehow this kind of record keeping is found to be neither expensive nor onerous), and the existing culture of “no receipt, no VAT.” The GRA has a euphemism for all of this: leakage. Mr. Statia should be well aware that many of his people have to get daily transfusions. This country cannot afford the continuing hemorrhage; it cannot build either a present or a future on the massive under invoicing that rewards all the participants, other than the state. When there is collaboration from the inside, then this is tantamount to officially sanctioned smuggling and right under the nose. With such standards entrenched, it is not surprising that the so-called private sector is complaining bitterly when it hears about tightening and new taxes.
So far this has been about the serious and the troubling. It is time for a little bit of the comical.
A trusted (and credible) business friend shared that for donkey years the charge (a tax by another name) to moor an incoming ocean vessel of thousands of tons was around a few hundred Guyana dollars. That amount is not only meaningless, but ludicrous; yet it is what had prevailed for ages. How can that be!
And if that is found hilarious, here is a still better one. A man looking at his rates and taxes receipt came across this beauty: the basis for the calculation of tax monies due on his residence is less than the cost of his dog. This is repeated for added emphasis: the dog purchased as a pup had a higher price tag than the house where the master lives. Laughter aside, how much longer can this stand?
For the record, no honest hardworking citizen welcomes taxes. Here the environment and realities have been underpinned by fraud, evasion, illegal profiteering, and outright criminality to an enormous degree. Something has to give. Some people have to be made to pay their honest share. It has to start now.
In closing, the following has to be said: there are significant differences with the Hon. Minister of Finance; I have little to no regard for City Hall; and I am suspicious of the GRA. As for the lamenting segments of the private sector, there is only longstanding disgust and considerable contempt. When honest commerce gains a foothold, I could develop some empathy, even support. In the meantime, the taxes must be paid, and all that is rightly due.