Clarke pledges tax write-off reform

The Holness administration is to “immediately improve” the tax write-off system to make it more transparent following a Sunday Gleaner report involving $4 billion wiped away since 2018, Finance and Public Service Minister Dr Nigel Clarke has said.

The newspaper report outlined the difficult process to get information on 86 companies whose corporate income tax (CIT) arrears were cleared under the provisions of the Tax Collection Act.

The legislation empowers the tax commissioner to make recommendations to the finance minister to write off monies owed in taxes, penalties, and interest.

In 2013, under the influence of the International Monetary Fund, the Government changed the law to establish criteria for write-offs, removing the discretionary powers of finance ministers while also requiring the publication of the information.

However, public access is not easy, as although Tax Administration Jamaica (TAJ) released some information to the newspaper under an Access to Information Act, the revenue collector, as a matter of policy, does not name companies.

Getting that bit of detail along with the reasons for write-offs meant going through dozens of Jamaica Gazette publications, the State’s newspaper, in which the minister must publish the companies and the amounts removed.

CHANGE COMING

Accessing the Gazette is also difficult because it has no set publication period, is not accessible from government websites, and state agencies typically tell journalists to go to the printers.

Clarke said some of that is about to change.

“I will direct that where an order is published in the Gazette on the tax write-off determinations made by the commissioner general, we will upload that issue of the Gazette to the ministry’s website within 30 days of it being printed,” he said in a letter that is published in today’s Gleaner.

The Gazette does not state precisely why each company gets a write-off, merely noting that the tax boss has determined the sums to be cleared as “uncollectible”.

On that, Clarke said the finance ministry would examine “whether the write-offs can be categorised by the specific criteria in the regulations on which the commissioner general made the write-off determination”.

“The publication ought not to paint all taxpayers with the same brush if circumstances differ substantially,” he explained on why the process could be “more transparent”.

“It is in the public interest,” Clarke said, “that this process, which has been in place since 2013, is properly understood and enjoys the confidence of the Jamaican people.”

Among the companies that have received write-offs since 2018 was what TAJ identified as ‘Company AB’, which was cleared of its $1.5 billion in CIT arrears.

To date, The Gleaner is unable to identify the entity because the Gazette in which details would have been recorded cannot be located so far.

Another company was Facey Commodity, a food-distribution firm that belongs to the Facey Group that Clarke headed as chief executive officer from 2009-2013.

Approximately $44 million in interest that accumulated in December 2009 was written off in 2019.

The tax commissioner is the sole authority in the law empowered to initiate a write-off, and the finance minister, in his letter, said the commissioner “has no flexibility outside of these rules”.

“Rightly,” Clarke said, “the minister has no power to determine a tax arrears uncollectible. The final step requires the minister to publish an order in the Gazette of the determination made by the commissioner general.

The Ministry of Finance and the Public Service told The Gleaner that the top five reasons for the $4 billion in write-offs since 2018 were the inability of companies to pay; businesses closed without any assets; directors cannot be located, were terminally ill, or have died; or companies bankrupt.

Debts older than 10 years and where the cost to collect is greater than the debt can be used as legal reasons to forgive a company in arrears.

The write-off mechanism is also the only route to clear the system of excess taxes, interest, or penalties, if, after a settlement, an amount ­initially billed by TAJ is lowered.

The $4-billion written off since 2018 is likely to be much higher when other tax types are considered.