The tragedy of Godwin Maxwell

We will soon forget the name Godwin Maxwell. But his story is most likely unique in Guyana. Mr Maxwell, a man who according to the press made a living by being a jack of all trades in the Mahaicony area, met his death in the most unusual circumstances. Having been granted bail of $30,000 he escaped from police custody and jumped into the Mahaicony River where he died by drowning. He was on a charge of tax evasion. Let us not stretch this. Neither the GRA nor the Magistrate could in any way be remotely responsible for Mr Maxwell’s unfortunate death. The GRA has a mandate to collect taxes and the Magistrate has a duty to execute the law.

Deal with tax evasion
This column has consistently called for and supported the efforts of the authorities to deal with tax evasion. My interaction and experience suggest that there are some genuine efforts to deal with it. But one has to wonder why, like in the drug trade, only the small fish ever get caught. With the politicisation of all aspects of public administration in Guyana, it would be unrealistic and naïve to believe that political influences are not brought to bear on the GRA. Indeed the story about a certain politico using his weight to get containers cleared rings with the loudness of truth.

We are told that Mr Maxwell is a promoter, even as the poor man had to depend on relatives to raise thirty thousand to post his bail. Unfortunately even a Freedom of Information Act would not allow us to know whether the country’s better-heeled promoters are pursued with the same vigour.

A country that cares about corruption would have laws that require disclosure, not to some secretive entity like the Integrity Commission, but to the public. To address corruption requires strong and independent institutions. We abhor them in Guyana. To address corruption we need honest and decent politicians. In Guyana, that would be the leading oxymoron. To address corruption we need equitable laws that are fairly applied. In Guyana, there is one law for the rich, the powerful and the connected and another for the poor, the voiceless and the helpless. The immorality of Guyana is that one set of people pays the tax while another spends it.

Tax evaders
It is often said with considerable justification that behind every fortune in the US was a robber baron, people whose wealth was acquired by the most unscrupulous methods, and often at the expense of others. The ‘honour roll’ includes names that have become famous with time – Andrew Carnegie, JP Morgan and John D Rockefeller being the most internationally recognised – and those who profited from bootlegging. That mostly nineteenth century American culture seems to be the model of economic development favoured by this government, with notable exceptions. Some of our business people actually make their money from various forms of contracts with the state and then turn around and cheat it – or rather the poor people like Maxwell – of taxes.

They ensure that their good deeds such as the pittances they periodically donate and the activities they promote are embellished in the national media while the bad is hidden in false returns to the tax authorities and secretive bank accounts abroad. The robber barons of the US on the other hand virtually created American philanthropy, using their immorally and illegally acquired wealth for the establishment of colleges, hospitals, museums, academies, schools, opera houses, public libraries, symphony orchestras, and charities. And they did not ship their money out of the country, hold two passports or live double lives.

Playing politics with taxes
The government in its cabinet outreach plays to the voters of the Amerindian community with outboard motors and motor cycles and more recently promises of laptop computers and solar power. The spending spree by Jagdeo on his outreaches represents a mockery of our campaign financing laws which President Jagdeo had promised since 2004 to address. And it is apposite to quote US president Ronald Reagan who said of the US: “We don’t have a trillion-dollar debt because we haven’t taxed enough; we have a trillion-dollar debt because we spend too much.” Jagdeo keeps racking up larger and larger domestic debts because he spends and spends, with no one around him to tell him that is not the way.

The dysfunction is also evident in the failure of our polity to give life and effect to Article 77A of the Guyana Constitution which requires the Parliament to enact a statute to provide for the formulation and implementation of objective criteria for the purpose of allocation of resources to, and the garnering of resources by local democratic organs. More than ten years on, and after at least two elections, this has not been done.

Compare this government with how Kenya in its new constitution treats its indigenous communities and regions. Article 11 of the Kenya constitution on culture requires Parliament to enact legislation that ensures receipt by communities of compensation or royalties for the promotion and use of cultures and cultural heritage and recognises and protects ownership of indigenous seeds and plants, their genetic and diverse characteristics and their use by the communities of Kenya. That constitution sets a five-year time limit for parliament to get this done and gives any person the right to bring an action in the courts to enforce the provision.

The Kenya constitution is explicit on the taxes the central government can raise and provides for a range of taxes which the counties can raise. It also provides that revenue raised nationally is to be shared equitably among the national and county governments and for county governments to be given additional allocations from the national government’s share of the revenue, either conditionally or unconditionally. Criteria for equitable sharing are set out in Article 203, but the amount allocated to county governments must not be less than 15% of the national revenues of the preceding year. If political rivals whose supporters two years earlier were at each others’ throats, pun intended, could come up with such eminently sensible solutions, how else can one describe our situation but as dysfunctional?

The private sector
The dysfunction also takes place at the level of the private sector which is prepared to accept annual promises about tax reform that by now it should know are empty. The reason on the one hand is the weak leadership of the private sector which is satisfied about the number of loopholes and opportunities available in the laws and about VAT which shifts tax from the business to the consumer. And on the part of the government, VAT brings in all the revenue it can reasonably need and for reasons mentioned umpteen times in these columns, provides an annual windfall to the spendthrift government.

We know only too well how the tax system favours the haves over the have-nots and the self-employed over the salaried worker. The national estimates for 2010 show the contribution of the self-employed sector to total tax revenues to be 2.28%! That many salaried employees pay more taxes than the more successful businessman seems further evidence of a structural revenue dysfunction. The single woman gets no relief from the tax system, regardless of the number of children she has to feed and send to school. The small allowance paid to the worker to help defray travel costs is taxed but the chauffeur-driven cars for the company executives are not a taxable benefit. Plato was right: When there is an income tax, the just man will pay more and the unjust less on the same amount of income.

Sacred cows
For reasons which are not clear, the government has resisted calls for a withholding tax in the construction sector where the contractor often treats his employees as self-employed and therefore not in the social security system either. Tax reform should consider data on what they contribute to the tax revenues of various sectors of the economy and what is paid to them by way of transfers and subsidies. We need to start disaggregating the taxes paid by the self-employed and those who can afford attorneys and politician-attorneys to make representation for them at various fora. Too many parts of the system are dysfunctional.

But the greatest irony and dysfunction would be whether the lawyers who were in court that fateful morning will be declaring the fees they charge their clients.

Note: I had promised to continue looking at the mining sector this week. However, I thought I should address the dysfunctional environment which confronted Mr Maxwell.

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