Little tolerance for VAT defaulters

VAT defaulters should be prosecuted immediately, according to nearly half of the respondents to an online poll by The Times, many questioning why the government should give this sector preferential treatment.

Just over a quarter of the respondents believe defaulters should not be given more time to come in line, while just under a quarter said defaulters should be given more time to cough up the money they owe.

The poll ran for just over one week and posed the question: "Do you agree that VAT defaulters should be given more time to come in line?" A third option was to say defaulters should be prosecuted immediately.

The question comes after the government's decision to extend a scheme to waive penalties for VAT arrears after the deadline expired, with defaulters having paid up just Lm2 million of the Lm21 million owed.

The government had offered to waive up to Lm5.1 million owed in penalties as long as the defaulters regularised their position by the end of June. The scheme has now been extended to September.

The reaction of the majority of those who responded was that the "government is being too lenient" and "rewarded defaulters with an amnesty", while employees had to pay their taxes on time via the PAYE system.

"They've been warned once. They've been warned twice. Why give them another chance? This situation turns our country into a laughing stock. Prosecute immediately I say," said one respondent.

One man described the decision to extend the scheme as "another case of an inept, spineless, do-nothing government", while yet another questioned if the government would be prepared to "waive my few liri if I have some income tax arrears".

An accountant wrote in and pointed out that from experience the defaulters were in effect taking credit from the government, which was over and above the amount given by a commercial bank.

"The company is getting a loan to finance projects and businesses that may not be viable... worse the company may be getting credit that is being used to finance the personal lavish lifestyles of the owners... and the government's move substantially increases the risk that the company will never be in a position to pay the tax arrears," he pointed out.

Another person insisted that it was totally unacceptable that companies should fund their working capital by not paying taxes.

"Is it the role of the government to fund a business operation?" he asked.

On the flip side, one man insisted that the issue was not a capricious act by the majority of defaulters.

"It simply means that they lack financial liquidity due to various reasons namely, but not limited to, lack of business turnover compared to previous years, payment of salaries, national insurance, income tax, bills... the list of commitments is endless," he said.

Another person echoed a similar sentiment saying that it was obvious that those who felt that the defaulters should be prosecuted were not involved in running a business.

"If they were they would know that all the sectors are at a standstill. No one defaults in VAT for the sheer pleasure of it. Business is currently very slow, but it seems that our government is too busy living in its ivory tower to realise," he said.