Auditor General's 2002 report
Remissions on import duties high -1449 rum shops failed to renew licences
Stabroek News
November 26, 2003

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Remissions on import duties totalled $15.4B, some 86% of the total revenue collected by the Customs and Trade Administration (CTA) in 2002.

This foregone revenue is actually $844.7M or 5.17% less than in 2001 but is still sharply higher than in 1999 (47.65%) and 1998 (31%).

According to the 2002 Report of the Auditor General on the Public Accounts which was tabled in parliament on Monday, petrol again accounted for the major share of remitted duty and consumption tax with $8.2B being remitted in 2002. This figure represents a decrease from the previous year ($8.7B). Other areas in which remissions were granted were motor vehicles ($1.7B), forestry ($204.4M), computers ($67.5M), mining ($220.8M) and others, which accounted for $4.9B.

Under the Fiscal Enactments (Amendment) Bill passed this year, most of these remissions are expected to come to an end.

Meanwhile, total revenue for the CTA amounted to $18.7B compared to $18.1B for 2001, an increase of $0.6B or 3.46%.

But there has been a decrease in the amount of import duty collected, from $3.6B in 2001 to $3.4B in 2002. Export duty also decreased from $12.3M in 2001 to $7.8M in 2002.

Acting Auditor-General (AG), Balraj Balram stated in the report that the main area of revenue collection was consumption tax on imported goods of $11.4B compared to $10.5B for 2001.

Amounts totalling $220.8M were also collected as consumption tax on services and of this amount $212.8M related to telephone services. Section 12 of the Fiscal Enactments Act of 1995 provides for the collection of a tax of 10% on the gross sum paid in respect of every overseas call of overseas fax message originating from Guyana. However, there was no evidence of the Guyana Telephone and Telegraph's (GT&T) records being inspected to verify the accuracy of the amounts remitted to the CTA. The report states that for the period of 1998 to 2002, annual remittances by GT&T to the CTA had declined from $270.7M to $212.8M.

The AG also noted that $7.9M was collected from three betting shops but there was no evidence that the shops' records were examined to verify the accuracy of the weekly returns.

Another area of concern is liquor licensing. The report notes that in Region 2, 3, 4 and 10 a total of 1,449 registered premises did not renew their licences in 2002.

The CTA continues to be plagued by bad cheques, the report says. For 2002, 112 of those cheques to the value of $119.5M were used for the payment of revenue. The report states that 108 of these cheques ($118.6M) were referred to their respective drawers, while four of those cheques valuing $965,529 were post-dated.

Two importers tendered ten dishonoured cheques valued at $13.1M to the CTA. The report said that it was evident that there had been some laxity in adhering to established procedures for authenticating cheques before accepting them. According to the report, all of the bad cheques for 2001 and 2002 were cleared up at the time of the audit. But an additional 61 cheques that the CTA had received between 1996 and 2000 worth $38.3M are still to be cleared.

Some of the transactions at Customs are done using a Permit for Immediate Delivery (PID), after which the importer has ten working days in which to perfect the documents, which includes the payment of the outstanding duties and taxes.

With the PID, importers can apply to the Customs for the clearance of their items in a shorter time than usual. After the items have been cleared, the documents are lodged at Customs House and when these are completed, the transaction can be considered closed.

The report states that for the year 2002, the CTA had 3 outstanding PIDs out of a total of 2,260 granted. The three outstanding PIDs covered duties and consumption tax of $436M. Inspite of this, there was evidence of the further granting of the facility to persons who had outstanding PIDs.

The report states that there is evidence that there has been some laxity on the part of Customs in ensuring that the system is strictly observed.

According to the report, the failure to ensure that the PID facility is operated within the framework of the Customs Regulations constitutes a serious breach thereof. The non-perfection of the PIDs would result not only in the loss of revenue, but also in long delays in the completion of ships' files at the transit sheds, the report states.

The Office of the Auditor General urged the CTA to institute measures as they are considered necessary to ensure strict compliance with the regulations relating to the PID system.

The system at Customs House also provides for deposits made by way of Bills of Sight (provisional entries) to be cleared and perfected within three months. However, the AG found that seven of those bills, valued at $2.8M, were still outstanding for the year 1999.

The AG's report states that according to the CTA Commissioner Lambert Marks, a request was made to the Ministry of Finance for a refund from the Deposits Fund, but so far no refund has been received. There was also evidence to suggest that importers were not perfecting their Bills of Sight within the specified period.

The AG's examination of the CTA's seizures register revealed that there were 49 seizures in 2002, but at the time of the audit only 36 files were presented for examination despite repeated requests. Of the 36 files presented to the AG, evidence was not seen of the disposal of the matters relating to seven of those seizures at the time of the audit in June. The AG report states that the Audit Department is urging the CTA to expedite the processing of the seizures of the goods.

The report states that of the $45.8M collected as overtime fees at the Customs Boathouse, $1.1M cannot be accounted for in the records. The AG's report recommended that this difference be investigated.

These funds represent overtime fees collected from merchants.

On the issue of revenue accounting and controls at the CTA, the AG report states that a significant amount of resources, some from donor agencies, has been invested into the Automated System for Customs Data (ASYCUDA). This system was introduced to the then Customs and Excise Department about seven years ago for the automation of documentation.

The report states that the system has not been fully implemented, as operations at the wharves have not yet been captured in the system. The report cites Marks as saying that certain constraints have been responsible for the prolonged delay in the full implementation of the project. One of those constraints that the Commissioner cited was the unavailability of lines from the telephone company and the prohibitive costs involved. (Johann Earle)