Thursday, April 30, 2009

Tax haven seeks taxpayer compliance

From the Nassau Guardian yesterday:

"Prime Minister Hubert Ingraham said the revenue shortfall experienced this fiscal year is so drastic that collecting "every dollar" that it is owed to the government will not be enough to remedy the situation."

The hard reality of revenue shortfalls is hitting this Caribbean tax haven hard, and it's having to borrow $200m from a consortium of banks:

"If you are not making the money, how else do you recoup it? By taxing you more? How else [do we] do it other than taxing you more?" Ingraham asked. "There are only (so many) ways to do it: Cut back on services, which means you cut back on people and the delivery of services; increase taxes; or borrow; or a combination of all three."

He might take a moment to consider the revenue costs that offshore centres like the Bahamas force on other developing countries. Then the newspaper reported this:

"According to the 2007 Auditor General Report tabled in Parliament earlier this year, the government is owed nearly $400 million in outstanding real property taxes, an amount which should be sufficient to compensate for revenue lost in the 2008-09 fiscal year. The report revealed that in total $563,261,853.75 in various taxes were owed to the government, an amount it labeled "exorbitant" . . . "We recommend that immediate measures be implemented, whereby delinquent taxpayers are made to settle their debts in an expeditious manner."

With a probably unintended twist of offshore irony, the newspaper also reported:

"However, the report did acknowledge that money might be hard to recoup."

A correspondent who pointed this out to us noted in her email:

"Wondering if some of those delinquent debtors to the Bahamian Treasury on their real property taxes include wealthy individuals who have bought their luxurious behind-locked-gates residences to acquire economic residency, in order to avoid paying taxes due to their original home state? Are there individuals double-dipping on the cheating? And what about the foreign owned banks and trust companies whose very existence there is to provide tax-cheat services? ... Do they have an obligation to pay taxes and are any delinquent?"

Well, well. An interesting set of questions indeed.


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