Call made for local private sector to pay fair share of taxes

The local private sector has been encouraged to pay their fair share of taxes as the revenue generated by payment is extremely important to the development of the country.

“Without the taxes and the contribution of the private sector, our way of life and the economy, as we know it, would certainly collapse,” says Comptroller of Inland Revenue Kelvin Pompey.{{more}}

Despite this, about 40 per cent of persons who should be paying taxes are either not paying their fair share or not paying any taxes at all.

Pompey made this disclosure on Thursday, March 26, while speaking at a St Vincent and the Grenadines Chamber of Industry and Commerce (SVGCIC) luncheon, which was held at the Calm Waters Restaurant at Ratho Mill.

Addressing the luncheon, which attracted a wide cross-section of the private sector, Pompey said in relation to tax compliance, his department estimates that only about 60 per cent of the persons who should be paying their taxes are doing so.

He stressed that the 40 per cent non-compliance rate is unacceptably high.

Giving some figures, the comptroller said that during the 2014 fiscal year, the calculated compliance rate of 60 per cent saw EC$230 million collected, but had there been a 100 per cent compliance rate, “we would have collected around EC$383 million.”

He said that a 100 per cent compliance rate would have seen an additional EC$153 million added to what was collected and while no one is expecting to achieve 100 per cent compliance, it is important that more persons do what is right and pay their taxes.

He said that even a marginal increase will see more revenue gained and the more revenue, the more government will spend in the local private sector, hence improving the economy.

He noted that for the fiscal year 2014, the government estimate for current revenue was EC$521 million and of this amount, EC$464 million or 89 per cent was expected to be derived from taxes.

He stressed that businesses in SVG have contributed 95 per cent of the recurrent revenue received by government, while a significant amount of the money obtained by the state was spent on wages and salaries and to procure goods and services from businesses here.

“I’m making this point to say that the State has a high dependence on the private sector…the private sector is the main driver of the economy,” said Pompey.

Pompey told business persons that the payment of taxes translates to a better economy, “so failure of businesses to comply has a negative impact on the country… we need a higher level of compliance.”

He stressed that both the Inland Revenue Department and the SVGCIC have an important part to play to ensure fairness and equity in the tax system.

During his presentation, Pompey also noted that it was important to educate persons on taxation, while he stressed that the better a business does, the better it is for his department. He used the opportunity to give advice on what he considers proper business practices, while he commended the SVGCIC for hosting the event.

Pompey opined that locally, businesses need to re-examine their opening and closing times, while looking at the goods they sell, as well as where goods are imported from, as certain goods can attract concessions. He also stressed that benefits can be derived from the use of technology.

“In an environment where we are struggling to be competitive and promote greater sales, a business has to make an assessment of how and when people shop,” said Pompey.

The luncheon, which was held in collaboration with the Mustique Company, also heard from president of the SVGCIC Christine DaSilva and executive director Anthony Regisford.