Election Goody No.1; amnesty extension!
Hurray … election goodies have begun. The income tax amnesty has been extended to September 30th. But like an ungrateful voter, my response is a big steups. Unless the extension of time is accompanied by the release of refund cheques, we are all in the same place.
The tax amnesty was conceptualized to provide an opportunity for big businesses to regularize their outstanding taxes before the Tax Authority begins to focus on recovery. For the amnesty to be effective, the timely release of refunds is critical.
There is hesitancy to take advantage of the amnesty because business and people simply do not have the money to pay their taxes. If businesses did not have the funds in time for Monday 16, it is unlikely that they can raise those funds for 30 September for this amnesty to make sense.
The amnesty should be extended to October 31st in keeping with the statutory deadline established by the Registrar of Companies. This would give the government the opportunity to pay all refunds, which some businesses are waiting for in order to pay the same government.
Daily businesses face impatient bankers as they negotiate overdrafts. They burn through cash reserves to pay those overdraft costs, which are incurred from not getting timely refunds. They live in hope that their creditor’s list will be reduced by one—the GOTT.
If a business cannot attach a cheque to the tax submission, then they are at the same place as prior to the extension of the amnesty. A little common sense will tell you that if you pay me and I pay you back and do some other things with the money you refunded me, the multiplier effect will kick in and make a difference.
There was a time when holding a government contract could back your overdraft, but not anymore. There is now a polite question: “Do you have any other contracts?” If the answer is no, then you’re sure to be sent in another direction to find some other promising projects.
The business model of relying on government contracts is unsustainable. We have learned that no matter who is in power if you or your business is not supportive of the government, you will be victimized and receive the polite regret letter indicating that your submission or proposal was not successful.
The last six years in this country has seen no wiggle room to run any business. The banks and financial institutions are ‘wetting’ us with interest and service charges. Those businesses with interlocking directorships are taken care of with preferential treatment, but the ‘Ramlal Public’ enterprises are doing financial somersaults to honour their obligations.
The minister of finance must understand that for a number of businesses in the present economic climate, the timely release of the refunds is critical to them staying afloat. If the minister really understood the hardship businesses are experiencing, he would release the funds to pay outstanding refunds. The immediate impact would be an injection of funds into the spending stream. The second benefit would be that the government’s coffers would be immediately increased because the funds would be available to pay outstanding taxes and benefit from the amnesty.
Only an uninformed person would ignore this amnesty and allow their interest rates to increase. This amnesty is a gift horse but there are constraints, which in some instances can only be relieved by the government doing the responsible thing and paying our tax refunds, including VAT.
This two-week extension is another example of fiddling and fishing for election likes.