Interview: Allyson West
What factors led to Trinidad and Tobago’s decision to establish a new tax authority?
ALLYSON WEST: Tax administration has become more complex and demanding. Internationally, T&T must comply with new obligations including the US Fair and Accurate Credit Transactions Act of 2003 as well as the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes and its strategy to curb base erosion and profit shifting. The current system has proven to be too inflexible to deliver services that both adequately protect national revenue and meet the expectations of taxpayers.
In T&T tax administration is currently the responsibility of the Board of Inland Revenue (BIR) and the Customs and Excise Division (CED), both of which fall under the remit of the Public Service Commission (PSC). The PSC is responsible for the recruitment and training of almost 40,000 public officers. Employees of the BIR and the CED are subject to rigid rules regarding remuneration, staffing, structure and promotion. The government recognised its obligation to establish a structure that would provide an efficient system of tax collection as part of adapting to the more demanding international operating environment. The T&T Revenue Authority (TTRA) is being designed to address these issues and should be established in early 2019.
How have best practices and the experiences of other markets influenced the design of the TTRA?
WEST: An effective revenue authority is critical to the achievement of key areas of national development and we have not taken its establishment lightly. We have carefully analysed more than 60 tax administration systems from every continent, although we have been careful not to try and adopt any single experience and apply it wholesale to T&T. Rather, we have sought to identify comparable environments, operating systems and structures alongside their results in order to adapt and apply elements that are most appropriate. We found the Kenyan model had the most lessons for us in terms of characteristics. We are also mindful of markets closer to home such as Guyana, Jamaica and Barbados. The purpose of our benchmarking has been to identify good practices, adapt those that suit our needs and be more aware of what we need to avoid.
In what ways could additional measures help to broaden the country’s tax base?
WEST: There are many simple measures that could be adopted to enhance collection rates and broaden the tax base. The TTRA will have access to third-party information to allow for the identification of non-compliers.
For example, this approach could be applied to the arts and entertainment industry where we do not have a true sense of the cash and value-added tax flows from revenue-earning events and activities. We need to monitor these sectors closely to ensure individuals and organisations are accurately declaring their income and paying their taxes.
How will the property tax and Valuation of Land Act reform impact property owners?
WEST: Property tax is being reintroduced to ensure that all property owners in T&T contribute to the costs incurred to service their properties and communities. The new regime was introduced to ensure equity and fairness in the application of the tax.
Although a tax on property has existed in T&T for almost 100 years, no nationwide land valuation has been undertaken since 1948. There were different rates that applied to different regions of the country – the most prevalent of which was 7%. An application of that rate on current property values would have resulted in a heavy tax burden for property owners, including the most vulnerable. The new property tax regime applies scaled rates that will depend upon a given property’s use, with the rates being 1% for agricultural, 3% for residential, commercial at 5% and industrial at 3% or 6%.