Garth Rattray THE GOVERNMENT owes billions of dollars; some even say that it is broke and scrounging for money. There has been limited/sluggish success from ongoing efforts to encourage compliance and recruit new taxpayers. I believe that this is due in part to the administration's inability to engender confidence because of wastage, systemic corruption and recurrent costly mistakes. I further believe that in order to achieve greater compliance, there needs to be a radical change in the attitude and policies of the tax collection system. Recommendations from the newly formed Tax Policy Review Committee, mandated by Minister Davies to examine and review the current tax system, are expected to make things simpler, more equitable and efficient.
TREATED WITH SCEPTICISM
As things stand, small businessmen and women who choose to form a limited liability company to easier manage their business and protect themselves from frivolous harassment, inadvertently walk into prohibitive expenses and endless headaches. They must set up their company (small or large) by travelling miles, wasting many man-hours and spending anywhere from $20,000 to $50,000. They may require a lawyer but will need an accountant and an auditor. There is interminable paperwork and various taxes like the Asset Tax and HEART Trust deductions that companies must pay.
Conscientious companies and other business people who routinely submit their deductions and assorted taxes are sometimes subjected to audits. Even when compliant and brimming with documents, they are often treated with scepticism. Tax interviews can easily turn into apocalyptic inquisitions as the burden of proof is put on the hapless victim(s) of what appears to be Napoleonic tax laws. Companies are often called upon to bring in proof of payments of deductions and other taxes because the relevant government departments are unable to find lost paperwork.
Just recently our office was instructed to resubmit (and pay the current fees on) a particular lost document that was already submitted eleven years ago! Even before properly checking for internal errors, collecting agencies are quick to accuse taxpayers of being non-compliant and send threatening (red-inked) court notices at the drop of a hat. They speak freely of court, convictions and sentences. I could go on and on but suffice it to say that, although they say that they are exercising a softer approach, the current tax system is intimidating, accusatory, cumbersome, frustrating, inefficient and worst of all, inflexible.
TAX SYSTEM UNFAIR
The Tax Policy Unit asserts in its mission statement that it expects to provide the government with the necessary revenue to meet its commitments through 'tax measures that broaden the tax base by creating a system that facilitates voluntary compliance by being efficient, simple and fair'. But the tax collecting system is anything but efficient, simple and fair. An estimated 40 per cent of the economy remains 'informal' and therefore largely untaxed. The burden on compliant taxpayers would lessen if more people contributed but under the present system those outside the tax net will always remain elusive. They won't willingly expose themselves to intense and possibly repetitive investigations, expensive tedious accounting and a rigid tax system that siphons off huge percentages of their gross income.
We need a flexible, less hostile and more user-friendly system of taxation.
Dr Garth A. Rattray is a medical doctor with a family practice.
