National Assembly approves numerous budget allocations |10 April 2021
The National Assembly yesterday considered and approved budget allocations to numerous entities, including the Seychelles Revenue Commission, Fair Trading Commission and the Financial Intelligence Unit.
The Seychelles Revenue Commission (SRC) was first to be tackled, and was defended by Minister for Finance, Economic Planning and Trade Naadir Hassan, commissioner general of SRC Veronique Herminie, deputy commissioner general Fred Morel, and commissioner of customs Paul Barrack.
In introducing the R139,692,000 allocation, Minister Hassan outlined the entity’s mandate in collecting taxes and facilitating commercial activities to support the domestic economy, elaborating further to note the key priorities throughout this fiscal year towards improving compliance and modernising the commission, involving capacity-building for employees of the entity and customs, internal restructuring to introduce new mechanisms to address non-compliance for tax and customs, improving the information-management systems, introducing platforms which allow for payments and tax return submissions online, and modernising the commission to render services more effective and efficient.
“The total budget for expenses is R139.7 million, 75 percent of which covers wages and salaries. There are provisions to employ more officers to facilitate the new work arrangements. The 2021 budget represents a net increase of R3.5 million, as compared to 2020. Major expenses under goods and services include a new scanning machine for customs and the postal services hangars,” Minister Hassan noted.
Throughout the sitting, members of the assembly were particularly concerned with whether there are loopholes within the taxation system, the challenges the commission faces, and the budget allocations towards programmes and measures aimed at rectifying inconsistencies and shortcoming within its operations.
In response to Hon. Waven William, elected Linyon Demokratik Seselwa (LDS) member for Grand Anse Mahé who sought clarifications as to how much is owed to the commission in taxes, Mrs Herminie seized the opportunity to detail that one of the functions of SRC is to create debt, so as to generate revenues. As at the end of January 2021, the debt is R1.026 billion, applying to different tax types.
“Within this, 42.5 percent is penalties, so R43 million is penalties and interest that we added to it. Fifty (50) percent of the debt is business tax, 25 percent for Value Added Tax (Vat) and 6 percent for income tax, so it applies to different tax types. Of the R1.026 billion, we have 678 cases that are on hold, as the law permits for taxpayers to object, we have R253 million under prosecution, and we have 64 cases at the tribunal,” Mrs Herminie noted.
Mrs Herminie further highlighted the self-assessment taxation regime and the sheer volume of documentation from 19,969 taxpayers, with only 42 auditors and tax officers to handle the heavy workload. She went further to note a provision within the budget, for recruitment of employees at the customs division at the Seychelles International Airport, to operate scanning machines.
Despite the debt, it is essential that members also take note of the receipt and collection efforts of the commission, the panel stated, with Minister Hassan highlighting efforts to expand the collection base and reduce the taxation level.
“As I mentioned in the budget address, we expect to collect R6.17 billion through taxes for the fiscal year of 2021. In 2020, SRC collected R6.37 billion, which was R47 million in excess of what was budgeted, despite the economic difficulties caused by the Covid-19 pandemic,” said Minister Hassan.
“To guarantee collection for this year, SRC has found it necessary to concentrate on improving and reinforcing compliance, in conformity with tax legislation, especially for taxpayers who are not complying as they should,” Minister Hassan asserted.
A total of 29 members voted in favour of the budget, while one member abstained from the voting process.
Minister Hassan remained in the assembly throughout the afternoon session, alongside the chief executive of the Fair Trading Commission (FTC) Francis Lebon, and officials from the finance ministry to defend the entity’s budget to a sum of R14,000,055.
Of the total amount, R8.86 million is allocated towards wages and salaries, whereas R5.187 million is for goods and services. The wages and salaries headings has seen increases this year Minister Hassan said, including an increment of R284,000 to cater for adjustments in basic salary, marketable skills and graduate allowances for eight staff who recently completed study programmes last year.
The budget has also seen a reduction of R217,00 in goods and services, in light of the economic crisis, which has forced the entity to readjust its priorities, and identify where to reduce costs by employing maximum use of technology within operations.
FTC is a corporate body established under the Fair Trading Act 2009, and is governed by a board, with the CEO responsible for investigating cases for consideration of the board.
According to Mr Lebon, FTC laws are soon to be revised so as to eliminate duplication. He also clarified that FTC cannot function as a standalone entity, and needs close cooperation with other entities such as the Seychelles Licensing Authority (SLA), the Seychelles Bureau of Standards (SBS), and the Department of Information Communication Technology (DICT), although the provisions relating to consumer protection are not on par with that of FTC, considering that they are somewhat outdated as compared to the FTC legislative framework.
United Seychelles (US) members, Hon. Noline Sophola and Hon. Audrey Vidot urged the panel to take up the issue of citizens who are struggling financially, especially now that the domestic economy is in decline, suggesting that price control mechanisms are once again introduced. In response, the CEO made reference to two important functions of the commission in educating consumers as to their rights, to complement enforcement measures. In 2020, the commission published 202 educational materials, and conducted 139 inspections, resulting in the issuance of over 100 compliance notices, most to retailers.
"I give you my commitment, that with our budget, we will continue to push for education, through different platforms," Mr Lebon assured the assembly. Each week at least two rulings against non-complying businesses are published on the commission's Facebook page.
Adding on to the same point pertaining to cost of living, Minister Hassan highlighted the dropping foreign exchange rate, the reform measures being implemented within the Seychelles Trading Company (STC), discussions and negotiations regarding shipping routes, all of which are expected to impact positively on the cost of living. Minister Hassan added that price control mechanisms serve to distort the market, causing more damage than good.
In consideration of the challenges and incnsistencies in the domestic market, CEO Lebon informed the assembly that the competition division within FTC employs only staff. The biggest challenge in pursuing competition cases is obtaining relevant information in order to make determinations.
The commission presently employs 34 employees, with human resource posing a major challenge.
The commission's budget was approved by 23 votes.
The assembly also approved the R19,199,000 allocation to the Financial Intelligence Unit (FIU), headed by director Richard Rampal.
The entity, created in 2020, has among its main functions the responsibility for receiving and analysing inconsistent transactions relayed to the unit by reporting agents, against money laundering and the financing of terrorism.
With regard to a significant reduction in the security and enforcement heading, from over R1,138,000 million to R403,000, Mr Rampal noted that FIU presently employs non-Seychellois base security officers, whose contracts are to be terminated to give employment opportunities to Seychellois.
With the 2021 budget, the entity proposes two recruitments to assist with the beneficial ownership mandate, as well as a prevention officer.
The assembly was particularly concerned with the partnership and service agreements with other bodies.
Before ending the sitting, the assembly voted to approve the Tax and Customs Board allocation to a sum of R1,375,000, that of the Government Audit Committee at a total of R810,000, and that of the National Bureau of Statistics to a sum of R24,363,000.
Under the guidance of Speaker Roger Mancienne, members observed a moment of silence in honour of Prince Phillip, husband to Queen Elizabeth, who passed away yesterday.