Government debt collection falling short, says Ministry report

The Ministry for Revenue’s debt collection and recoveries division achieved only one-third of its target for recovering outstanding debt due for the financial year ending in 2018.

The Ministry of Finance’s report to cabinet for 2017-18 shows that government debt collectors are falling well behind a target of recovering 25 per cent of all outstanding money owed government each year. 

The report says that arrangements allowing the government's debtors to repay their debts incrementally - known as instalment arrangements - was potentially delaying progress on recovery of money owed. 

Only about 13 per cent of approved instalment arrangements were closed and cleared in that financial year, the report finds. 

“One of the challenges faced by the Ministry for these arrangements is the length of the settlement period agreed with taxpayers which lead to increase in the amount of recoverable debt that needs to be collected," the Finance Ministry report said. 

“Due to increase in the level of compliance, only 32 cases out of 50 for both arrears and returns were referred to the enforcement team for recovery; 10 cases for those taxpayers with arrears and returns were referred to the legal team for action." 

In April, the Minister for Revenue, Tialavea Tionisio Hunt, said taxes owed by the business community to the Government had decreased from $100 million tala to $70 million. 

“Three years ago (2016) the outstanding debts of uncollected taxes amounted $100,000 million plus," he said. "Fast forward to now it has reduced 30 per cent. 

“These are the taxes owed by the business community and we are doing everything we can to collect it."

"For financial years 2017 and 2018, the Customs Division collected $326.4 million while Inland Revenue collected $176.6 million respectively.” 

According to the finance report, the ministry is also following up on those businesses that haven’t renewed their business licenses. 

"Businesses that are no longer trading are to be deactivated from the RMS while late penalty is to be charged after the due date for renewal of business licenses or a waiver granted by the Commissioner.” 

The report says that all indicators for the Audit & Investigation division were achieved within the financial year 2017-2018 with the exception of timeliness for audit cases.

“Achievements include [the] number of cases audited, [the]  percentage of tax shortfall penalty to be imposed on all audit cases and [the] number of hidden economy cases operating outside of the tax system," the report says. 

Furthermore, the report says the actual revenue collected at the end of the financial year was short by 3 percent. This is due to slowly implementation of some of the tax reforms that were targeted to be effective in the second half of the financial year. 

A huge delay in internal audits conducted was caused by staff turnover but the agency says it was nonetheless able to achieve four out of five post-and-clearance company audits conducted.  

Even though additional revenue was collected from cases of non-compliance after secondary checks the Ministry only achieved 14 out of 100 cases.

Nonetheless, the report notes that rates of client satisfaction with services are up.  

Last month the Minister revealed in Parliament the Government's revenue projections for this financial year had fallen short by $22 million tala.

"The current financial year (2018) we were tasked to collected revenues in the amount of $528 million," the Minister said. 

"However, additional appropriations was required and an additional $2 million was added. 

As of 17 June 2019, we have collected $507 million, we are short of $22 million."