Gov’t giving away VAT monies, says former minister

Recent amendments to the Value Added Tax (VAT) Act have been described by a former senator and respected academic as “a giveaway” from Government to defaulting businesses she is pleading for more clarity from the administration on the decision.

Maxine McClean, Minister of Foreign Affairs in the previous Democratic Labour Party (DLP) Government expressed disappointment that at a time when citizens are being asked to carry “a significant burden”, tax-defaulting businesses were being spared.

McClean, a caller on Voice of Barbados’, Down to Brass Tacks programme was responding to a decision last week in Parliament to write-off outstanding VAT debts from 1996-2000 and waive penalties and interest incurred from the 2001 to the end of 2017.

While Minister in the Ministry of Finance, Ryan Straughn said the amendments would address “millions of dollars” in refunds owed to citizens and companies, McClean suggested the policy was inequitable.

Instead, she recommended Government properly calculate the amounts of VAT owed by businesses against what it owed them in tax refunds. That way, the party with more debt would pay the difference in a ‘netting off’.

“If you want to make it fairer, why did you not net it off against those arrears that the Government owes you? If businesses have closed, let us see a list of the companies still in existence and some sense of the amount of money, because what we are hearing is a giveaway of monies collected on behalf of Government,” said McClean.

Describing the ongoing situation as “a whole lot of confusion”, she said: “My concern really is about the VAT monies collected on behalf of Government, which were to be used for taxpayers. The ‘write off’ is not netting off.”

While agreeing that a waiver on the penalties for VAT defaulters could be burdensome, McClean stressed Government should not be so willing to do the same for the principal.

“…We want to collect the money that you [businesses] collected on behalf of the Government…They are saying they will let you keep the money you collected and will not ask you to pay any penalties on that.”

However she argued: “[VAT] was paid by old grannies, wealthy Bajans, tourists and that is money which was not generated by the person’s business… and money which did not belong to them. This is not corporate tax that is being written off. This is money collected on behalf of Government, which goes to the Consolidated Fund to pay for the hospital, to pay for our schools, to pay for our roads etcetera and it makes absolutely no sense,” said the passionate McClean.

Government Senator Kay McConney, last Tuesday said the ‘write off’ did not exempt taxpayers from their obligation to repay the money and gave the assurance that the BRA was recruiting debt collectors to recover it.

Despite numerous explanations by officials in both Houses of Parliament, McClean is not satisfied with the level of clarity offered to the public.

“They have not given amounts, they have not said the state of the companies, whether they are companies that still exist or whatever and that it is a serious giveaway at a time when people are being asked to carry a significant burden,” she said.