(Not) paying taxes

There is an old American saying going back to the eighteenth century that in this life nothing is certain excepting “death and taxes”. But from numbers coming out of the Auditor General’s Report and remarks by the Minister of Finance, it would appear that an overwhelming number of Guyanese – 85 per cent – who fall in the “self-employed” category, have been able to escape taxes. They simply did not bother to file.
The Report offered the numbers: “As of December 31, 2015 there were 126,669 registered self-employed persons. Of this number, 93,157 were identified as active however only 14,164 filed a total of 34,644 returns resulting in collections totalling .407 billion. Therefore, 78,993 self-employed persons did not file their tax returns.” The “self-employed” generally sell goods and services to the public and in Guyana are mostly professionals such as doctors, lawyers and accountants, and the more ubiquitous farmers, shopkeepers, barbers, taxi-drivers, minibus owners and operators, beauticians, hucksters/vendors, etc.
But the non-payment of taxes was not confined to only the self-employed. In 2015 the Report showed that out of 2995 “active” corporations, only 786 of them – less than one in three – submitted tax returns. Back in January, when he presented his Budget, Minister Winston Jordan pointed out that those who work in the gold and diamond fields – defined in the tax laws as “Tributors” – also did not generally pay their taxes. It is clear that in Guyana there is a prevalent culture of tax avoidance.
It is more than a mere coincidence that the certainty of paying taxes originated in the US, which was the first Republic established under the notion that citizens must govern themselves. It was self-evident to them that while they did not want the tyranny of a king or nobility ruling them, and their rallying cry was “no taxation without representation”, taxes yet had to be paid to fund all the services they expected from government.
In their case these also included the need for protection and opening up their country for development. To create their independent Republic that rose to eclipse Great Britain and continue into the present as the preeminent economic and political power, the people evolved a “civic culture” that guided their duties as citizens. The payment of taxes was seen as one of their prime “civic duties”. A TIME poll taken during the recently concluded presidential debate showed that 86 per cent of Americans still believe in that value.
This is what is needed in Guyana that achieved independence 190 years after the US and has the benefit of witnessing what a people imbued with a civic culture can achieve for their country and themselves. But if taxes from the people are used by governments to provide the services and overall development that are expected by those people, the question is why a similar “civic culture” as the Americans’ developed not here? One answer is the people in Guyana, unlike those in the US, have not seen their taxes used in a positive manner.
In America, there are also accusations by citizens of governmental misuse of tax funds, but at least they have evidence that notwithstanding abuses, there has been development. The same cannot be said in Guyana. And it is not just a matter of the polarised politics in an ethnically divided society causing credit not to be given to “their” government. Guyana has stubbornly remained stuck at the bottom of developmental measures as being just above Haiti in this Hemisphere even since the McIntyre Report of 1989 and this speaks most powerfully for itself.
Thus while Finance Minister Jordan in the above mentioned speech outlined measures that his government will be taking to go after tax cheats and evaders, an even more critical step is for government to demonstrate to citizens that their tax dollars are being put to good use.
While the “free rider” imperative is stubborn, its effects can be mitigated by governmental effectiveness.