Government is owed close to $1 billion in outstanding taxes, and today Parliament paved the way for the recovery of at least some of this amount by waiving all penalties.
The House of Assembly approved amendments to the Income Tax Act to formally and legally accommodate an amnesty announced by Minister of Finance Chris Sinckler in August for the period starting September 15, 2016 through to February 15, 2017, which in essence will result in the waiver of all penalties and interest for outstanding taxes paid during the stipulated period.
Contributing to the debate this morning Sinckler said Government had gone out of its way to grant the amnesty, adding that this was perhaps the third time the Democratic Labour Party administration had offered such a programme since taking up office.
He said Government took the decision against the background of how much it was owed, as well as its understanding of the difficulties facing companies and individuals.
“We are, from time to time, looking at the number of arrears that we have built up in Government over many years, and it really runs into the hundreds of millions of dollars, probably even closer to a billion dollars. I really don’t know what the exact figure is now. The last time we had a general check on that I think it was somewhere in the vicinity of $700 or $800 million, it could be more by now.
“And that is some of the active ones. There are some of the inactive ones that haven’t been dealt with for decades now. Even though we haven’t in the accounting system written them off, they are deemed now, generally even by way of oral discussion, to be considered to be unrecoverable reliabilities,” Sinckler disclosed.
Therefore, the minister said, not only would the amnesty help businesses and individuals, it would also assist Government in recovering some of what it was owed.
“Of course it helps [Government] as well because the
more money the Government can get in on a cash basis the easier it makes the life of the Government in meeting those demands, which of course are ever more . . . sophisticated
from the public of Barbados for various goods and services from the state. There is a correlation between the two,” he stressed.
Warning that “another amnesty will not come for a very, very long time to come”, Sinckler advised those who had not yet taken advantage of the reprieve to follow the lead of those who had and pay up.
In his August 2016 Financial Statement and Budgetary Proposals, Sinckler had announced an amnesty across all tax categories – Value Added Tax (VAT), Income Tax and Land Tax.
“Using data from VAT and Land Tax alone, and considering the outstanding taxes of $568 million, it is expected that for the financial year 2016/2017 an amount of at least $15 million may be collectable, based on past experience,” he said at the time.
During today’s sitting, Sinckler announced Government would introduce legislation, including amendments to the Barbados Revenue Authority Act, to introduce a single taxpayer identification platform, which would allow for a single tax clearance certificate across all of the tax categories.
“We are going to move to amend the law that there be one tax clearance because there will be one taxpayer ID system. You will have a tax number that will be your number in the system whether you are paying VAT, income tax, excise tax, land tax or whatever the case may be. Therefore when that system is done and you are given that number, you will be required by law to get, for purposes of business transaction, a tax clearance certificate. It will be a tax clearance certificate issued on all,” he explained.
Parliament also amended the Land Tax Act to accommodate the ongoing amnesty.