Barbados VAT shortfall: a cultural problem of rule of law?

Barbados Government announces it has hired a consultant! OOOOOOH!!!!

(VAT delinquents must be shaking in their boots!)

Barbados Finance Minister Christopher Sinckler recently held a press conference to announce that the Government of Barbados has failed miserably to collect a staggering $300 million dollars in VAT arrears.

That wasn’t exactly how Sinckler put it though. With typical political bluster he announced that the government was REALLY, REALLY, REALLY going to get tough and enforce laws that are on the books.

This time.

Here’s what the press release said said…

“The hammer could be coming down on those Value Added Tax (VAT) defaulters who have racked up a staggering $300 million in arrears inclusive of penalties and interest.”

And it got better…

“Given this situation, Mr. Sinckler disclosed that a consultant had been hired to review the legislation as it related to collections and enforcement.  He also revealed that the consultant had already submitted the draft amendments which were being reviewed by officials in the Customs and Excise Department.”

My God! A consultant, reviewed the legislation and submitted draft amendments that are being reviewed RIGHT NOW!!!

Wuhloss!!! I’d better pay up that VAT tomorrow.

Or… maybe the next day. 🙂

Frankly, Sinckler sounded an awful lot like the Commissioner of Police warning gangs that if he had the officers and the budget, the gangs would really really really have to worry. And the Commissioner of Police sounded an awful lot like the Minister of the Environment talking foolish saying that the government was going to install hidden cameras all over the island to catch illegal tippers.

A Culture that disregards Rule of Law

Could it be that the problem is that Bajans have been conditioned that laws and rules are generally optional depending upon circumstance and position? Could it be that we’ve learned from the big-ups that laws, if they exist at all, don’t apply to all? That is the way it is on de rock. Anyone can name a dozen situations and stories – most of them true.

And where laws don’t exist (integrity legislation, drunk driving, freedom of information, environmental legislation) they are to be promised at election time but never ever implemented. That is what we have been taught by our political elites and we have learned our lessons well from skilled masters.

“Doan give me such a fright, Minister Sinckler! For a moment I thought you were serious, but then I remembered all the other laws that your government promised to pass.”

Pass me another beer, darlin’. I don’t think we need to hurry off to pay that VAT right this moment! 🙂

34 Comments

Filed under Barbados, Business & Banking, Crime & Law, Culture & Race Issues, Politics

34 responses to “Barbados VAT shortfall: a cultural problem of rule of law?

  1. watcher

    There is no law. The amount of VAT owed by some pretty large businesses is enough that if forced to pay will put them out of business. This has been going on for a long time. Does anyone know that the Official gazette of Jan 26 2009 states that the Government, i.e.the Hon David Thompson in his capacity as Minister of Finance, in respect of Rayside Construction, has waived the penalties and interest for non payment of VAT for over $1 million relating to VAT periods from 2003 to 2005. Further, income tax waived is almost $600K for income years 2002 to 2005. By non action on collection the Government has painted istelf into a corner. Most of the $300 millin can be kissed goodbye.

  2. THX47

    This is nothing but a message for the rating services that Barbados promises to clean up its act. None of the VAT arrears will be collected, at least not enough to make one shred of a difference. This boat is sinking and every once in a while we pretend to bail out the bottom ourselves but mostly we wave at passing ships and beg for them to bail for us. Holes are getting bigger and the ships offering help are getting fewer.

  3. Wily Coyote

    Barbados has a RULE for EVERYTHING and Enforcement of NOTHING.

  4. Beefcake

    This is not the time to get tough with collections. Many businesses are having a hard time making ends meet. Forcing businesses to pay VAT before suppliers UTILITIES! payroll etc. will shut them down. They won’t be able to take out loans from the bank to pay the debt either since the banks lend for future activity and not settling old debt (despite what they first tell you when you sit with them).
    Government should have been enforcing collections when times were good, when people could pay, instead of getting lazy and saying “well, at least enough is coming in this month”.
    There will be enforcement, but it will be an over-reaction that will make things worse for everyone.

  5. watcher

    Copied from the Nation New.com July 2011.

    SUPREME COURT LIST:

    Sinckler said the massive sums owed Government could go a significant distance in servicing some of the needs of the country.

    SUPREME COURT LIST:

    Below is a list of some of the cases lodged in the Supreme Court involving the VAT Department.

    A sample of the hundreds facing judgements:
    – Rayside Construction [case No .2175/05] $5 198 828. 35 for Inland Revenue;
    -Clarke’s Auto Express [case No. 1729/2000] $1 250 932.51 for the VAT Department;
    -Spektakula Promotions [case No. 1630/03] $446 354.99 for VAT;
    -Pierce Furniture & Furnishings Ltd [case no.1255/03] $981 866.58 in VAT;
    -Roger Hill Trading as Sazzy Boutique [case No. 476/03] $878 615.42 in VAT;
    -Wild Pair Shoes [case No. 2719/02] $549 083.34 in VAT; and
    -Kentucky Fried Chicken [case no.115/02] $461 837.63 in VAT.
    -Divi Southwinds faces two judgements for [case No. 1217/01] $374 239. 43 and [case No. 1218/01] $673 961.09;
    -Grant Hotels Inc. has four judgements for $1 250 766.55 [case No. 2100/99], $826 744.87 [case No. 1157/03] and $27 229.36 [case No. 2099/99] for Inland Revenue and $880 420.39 [case No. 1074/03] for VAT

    Good luck Mr. Minister.

  6. amusing@hotmail.com

    cultural ? for sure…we think that only government entities are inefficient.. there are numerous ones in the private sector ..”you got space in a nice retail mall..i gun find a business plan ” …however this recession is battering most businesses into submission so good luck in collecting

  7. Micah

    Reading the above comments is rather depressing. The Government increased VAT to increase its revenues. However, it would appear that it has a problem collecting VAT monies. And if they go after the defaulting businesses and force them to pay VAT monies owed, then they may force said businesses into bankruptcy leading to job losses. No-one seems to be benefitting here.

  8. just want to know

    What I don’t understand with this VAT thing, when people like you & me buy something it doesn’t matter what, as long as we spend a dollar 15%/17.5% automatically are paid in VAT, so I can’t see how companies have a problem with paying VAT. Take for instance supermarket, the amount for each individual is added up already, so are these people taking
    what we as taxpayers have already paid and spending it. My conclusion to all this, these people should be put out of business, because they are robbing taxpayers and they should be made to pay up or close down, or whatever else the government want to do with their business, like put it up for auction to make up for the taxes.

  9. Beefcake

    A perfect solution for fixing the economy; let’s send employees home, shut the businesses in default, and see how the country fares.
    Central Bank admitted that its tax revenue is down 50% from Corporate Tax, which means businesses are earning less (only seems like the big firms, insurance, banks and utilities are bringing in the tax dollars). VAT goes up 17% and brings in 2% less than the previous year. However, government is unwilling to order payroll cuts, which many businesses were forced to do in the past 2 -3 years.
    On the other hand, government is bankrupt (both morally and financially?). They should do the same thing; sell off their assets and let staff go to get out of debt. They spend more than they earn, just like the businesses, so everyone should either try and swim together or sink together.

  10. amusing

    VAT arrears is telling us 2 things ..if the arrears have been piling up for a while then the business is extremely inefficient and is simply robbing the treasury ..( btw the pricinipals involved should be prevented from engaging in any business unless they clear their obligations, corporation or individual) current arrears can be the same but because of the severe recession vat input is incorporated in a negative cash flow.
    There are many private entities in Barbados that should not be around . Nepotism has created a false and frail business community and this recession is bring that to the fore

  11. Donald duck

    The 2% decline only occurred over a two month period. The Governor should have reminded his audience that there was a 16% increase in the VAT revenues (or $33.1 million) for the first quarter of this year that was reported on by the CBB.

  12. Donald duck

    The Minister should also tell us how much of that $300 million in arrears represents VAT that is in dispute!

  13. watcher

    @Micah

    These businesses should be forced into bankruptcy. Everyday little people are paying 17 1/2% on the things they are buying and the money is going into someones pocket. That money is being collected for the good of all of the people not just a selected few. Most businesses try to make 5% after paying tax. So these companies are at least 221/2% behind where they should be and the government is subsidizing them. Allowing businesses to continue and get a unauthorized 17 1/2% government subsidy is simply a bad business decision on part of the givernment. Should all of the hotels competing against those not paying their vat now do the same. 17 1/2% is a big number on every dollar spent.

  14. Wake up!

    Rayside Construction – acompany owned by CLICO, and the government led by their lawyer forgave them over $1million in VAT. Then there is Grant Hotels, whose debt was rung up as owners of Sam Lords Castle which was sold to…….CLICO! Was any of the money paid for Sam Lords garnished from Grant’s receipts to pay the arrears? Sorry. Stupid question.

  15. Contemplating Life

    This situation is not surprising…….

  16. Micah

    @ watcher
    I see your point. However, I can’t see Governmnent allowing that to happen for purely political reasons.

  17. watcher

    @Micah

    ……….so everyone should stop paying their VAT to the government. Just collect it from the little people and the tourists and spend it having a good time or putting it in your pocket or by some real estate in Miami. Why bother paying VAT if no one is going to bother you to collect it. These businesses NOT PAYING should be GONE or PAY and if they don’t the list of complanies not paying will keep growing and growing and growing and growing

  18. ac

    Govt. should put a lien on the business and give them an adequate amount of time time to pay or else sell the business at auction to the highest bidder.
    This is unconscionable to the the poor person who have to struggle daily to may ends meet while the government allow these big companies to fleece the country. In my opinion they can throw they a…s in jail and throw away the Key. Another reason why the VAT is so high government tying to collect the losses off the back of the working stiff.

  19. Beefcake

    Government is the biggest fleece of the country. Look at the most recent news, in only one case are they paying $60,000 per year (5 years) for storage of equipment, that cost $2 million, and the equipment couldn’t have been used as planned. That is $7.50 from everyone. And that is just one example – government is riddled with wastage.

  20. Donald duck

    Total VAT arrears in T&T reported to be only TT$300 million

  21. yatinkiteasy

    The problem with VAT, is that it is a system whereby Companies are empowered to be Tax Collectors for the Government. Essentially an honour system! So they “collect” taxes from their customers for goods or services sold, and then are expected to pay that to the Government, less the Vat that they paid to suppliers.Lots of luck with that idea.
    Then, there are all the case involving companies as shown in “Watchers`s” list, who had or have Political connections, so that their debts are written off when not paid.It is truly a disgusting situation, and my guess is that no one in Government has the balls to do anything about it. No one wants to rock the boat. Look at all the flack Dr Chase is getting because he exposed the fact that the Cuban doctors are not qualified to practice in Barbados.

  22. ac

    yeah beefcake you sound like one a them who haven’t paid your fking vat. So much for the government no lets throw all wunna in jail The poor taxpayer deserves better. How de hell could governments past and present allow sh..t e like this to happen and now expecting we people to pay through the a..ss and everywhichway to save the country from default on loans this is outrageous some body or bodies need to pay for this . What the hell is going on here. F everybody i going to miami and doing my shopping I have no intention of helping the rich live off my livelihood. .

  23. Beefcake

    ac, I’m sure you’ll declare your Miami purchases at Customs and pay the VAT and duties on those things, as I’m sure you’ve always done.

    The PROBLEM is that government spends more than it earns and has no plans to change because of politics and fairytale promises. Collecting money is a problem for all governments around the world. Debt to VAT, Land Tax, NIS, PAYE, Income Tax has been there all of the time for Barbados, but as long as cash kept flowing there was almost a blind eye to it. Now that the well is dry, they are desperate to get water wherever and however they can.

  24. tony

    I want some relief fro VAT but i am not waiting i want relief from the high prices but i am not waiting i want relief from this government and i waiting patientlly but i want you to help me get reid of them

  25. ac

    @Beefcake! In the long run i still will be ahead! As for the incompetence of the Government . These astronomical amounts owned by these countries did not just happen. The BLP government is the monster in allowing this to happen. Unfortunately the new government took 3years too long to do anything about it, Hopefully and i say hopefully i hope they used the full extent of the law to collect these money owed to the people of Barbados .Not forgetting that there is an election looming over the horizon a yard stick by which they will be measured

  26. michael

    Why can’t the Government take over those businesses ,send home the top dogs,keep the employees and tell the owners and top dogs,’when yu pay us what yu owe,yu can come back and take over’.That way ,no business will close down and no employee sent home !It is as simple as that !

  27. Peltdownman

    Please believe me when I say that I agree that companies that owe large amounts to government should be closed down. However, paying VAT is a matter of handling cash flow properly. A business person should be able to budget on a monthly basis for those items that they HAVE to pay – rent, utilities, NIS, PAYE and VAT. They cannot use the excuse that they have to pay wages. Wages are not an overhead in most businesses, and if the business cannot pay its obligations as well as wages and raw materials, then it should not exist – period. Bank overdrafts are there to even out the cash flow variations that occur from month to month. The problem with many businesses, as with government is that they are unable or unwilling to control their spending, so that when the 21st comes around every other month, the cash is not there to pay it. I would like to suggest that companies set up a separate VAT account at the bank and make sure, no matter how difficult, that they pay the requisite percentage of their takings into that account every week. That way, when the 21st comes around, the money will be there. It takes discipline, but then that is what running a company is all about – choices.

  28. it would be interesting to know how much the govt owes in vat refunds to the public?

  29. J. Payne

    Too many slackers been working in government for too long… What should we expect? Have you ever heard of such lunacy?

    Governments are the only authorities with the powers to demand taxes on citizens, and you mean to say the Barbados government has neglected to implement such measures to effectively obtain such revenue?

  30. J. Payne

    Ever heard of the term ‘lack of ability to govern ones selves?’ Well that is sure how this looks with something so basic.

  31. J. Payne

    The damage— is already done…..

  32. Concerned

    Well said, Peltdownman!!

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