Proposal to garnish tax debt similar to VAT regulations - Jordan

The proposed amendments to the Income Tax Act that would allow the Guyana Revenue Authority (GRA) to garnish funds from bank accounts, will almost mimic those already in place in the Value Added Tax (VAT) Act of 2005, though they have not been used.

Minister of Finance Winston Jordan had announced during his 2017 budget speech on Monday last, that “the provisions of Section 102 of the Income Tax Act Chapter 81:01 will be revised to provide authority to the GRA to garnish funds from bank accounts held by taxpayers who have outstanding tax arrears.”

This announcement has met with criticism from the opposition and the business community.

Leader of the Opposition Bharrat Jagdeo told a press conference at his office on Friday that this provision is one of the oppressive measures included in the budget which his party could challenge in court.

Additionally, former chairman of the Private Sector Commission Ramesh Dookhoo had told a press conference on Thursday that the business community could not support such a measure unless it was supported by a judicial process, which would see the GRA being granted a court order to effect garnishment.

In an invited comment, Jordan explained to Stabroek News that the proposed changes will follow the structure of Chapter 49 of the VAT Act, a legislation crafted and implemented under the Jagdeo administration.

This Chapter grants the Commissioner General of the GRA the right to recover unpaid tax by distress proceedings against the movable property of the person liable to pay the tax by issuing an order in writing, specifying the person liable, the location of the property, and the tax liability to which the proceedings relate.

Section two of the Chapter further explains that for the purposes of executing distress proceedings, the Commissioner may at any time enter any house or premises described in the order authorising the proceedings; and require a police officer to be present.

The property is then kept by the GRA until the person pays the taxes owed or until 10 days have passed. At this point, the property may be sold by public auction and proceeds expended towards the cost of taking, keeping, and selling the property then towards the tax due and payable. The remainder, if any, is restored to the person liable.

Commissioner General of GRA Godfrey Statia, when contacted, explained that as far as he is aware these regulations in the VAT Act, though they exist, have never been applied against a defaulting taxpayer.

He also stated that since 1929, the Income Tax Act has made provisions for the tax authority to recover sums owed. “GRA is always the debtor first in line to be paid,” he said adding that the income tax legislation specifies that the employer holds employee’s tax for the GRA, thus any sums in their accounts representing tax owed belongs to the authority.

“It is just that the regulations are now being clarified so that we can access those sums,” Statia said.