Finance Ministry promises ‘every effort’ to get $85m ten percent of the 2013 estimated revenueBy Gareth FinighanGovernment is owed a massive $85 million in unpaid taxes and has pledged to crack down on tax dodgers who “drop off the grid” in order to “beat the system”.A spokesman for the Finance Ministry said that the sum is the total amount of unpaid tax receivables more than 90 days old at the end of 2012.The bulk of the figure which does not include Social Insurance contributions comes from unpaid payroll tax and represents almost ten percent of Government’s estimated $871 million revenue for the coming financial year.The Finance Ministry did not comment on how the outstanding amount has been allowed to escalate in recent years, but latest figures show that the Accountant General’s office collected just ten percent of the total debt referred to it by Government departments in the last financial year up to March 2012.It established payment plans for a further 50 percent of the debt.Accountant General Joyce Hayward has been on administrative leave since last December and this week it was revealed that the department had been underperforming in a number of areas.In his Budget speech last Friday, Finance Minister Bob Richards acknowledged that many businesses were struggling to pay off their tax bills “in a timely fashion” because of an extended recession.He said officials were willing to work with companies in arrears, but would also hunt down tax dodgers in a bid to claw back some of the funds.And he said that, had the $85 million been paid on time, Government’s cash flow would have improved considerably, reducing its need for borrowing.Mr Richards kicked off his Budget presentation by announcing that Government’s overdraft was being extended to $2.5 billion, and that $331 million will have to be borrowed to cover the cost of running the Country over the next 12 months.Yesterday a Ministry of Finance spokeswoman blamed a “tax culture” for the failure of some to pay taxes, adding that a downturn in the economy in recent years had also had an impact. “This problem existed before the economic shift in 2008 but has certainly been magnified in recent years,” the spokesman said.“It is true that there are some taxpayers who simply are not able to meet their obligations due to the financial predicament they are in, but there are also others who choose not to and will do everything possible to beat the system. The administration of debt collection is time-consuming and costly.“However every effort is made to contact delinquent taxpayers, make arrangements to settle the outstanding debt and if necessary, proceed with court action.”The spokeswoman also warned that tax dodgers could face a jail sentence for non-payment — and that Government is prepared to “enforce the full penalties allowed within the current legislation framework”.Those convicted under the 1970 Contributory Pensions Act can be imprisoned for up to six months and fined $10,000.“When a taxpayer simply drops off the grid, ignores phone calls, dismisses letters and statements and makes no effort to address the outstanding debt, a different approach needs to be taken,” the spokeswoman said.“In order for Government to address the issue of unpaid taxes, it is important to understand and appreciate the role that taxes play in our everyday lives.“We all must do our part to ensure that Government has the necessary revenue to provide the services and infrastructure which we consume and depend on.”Chamber of Commerce President Ronnie Viera urged businesses in arrears to cooperate with Government in getting the debt paid off.“That’s a significant number and clearly it does impede on Government’s ability to operate,” he said.“The Chamber is aware that our members have been struggling and have gone on record supporting Government’s initiative to collect these back taxes. Clearly companies have a tax obligation and Government needs revenue in order to operate.“We are urging our members to work with Government to work out a payment plan.”Economics lecturer Craig Simmons said that, by failing to collect the funds, Government will incur further expenses.He pointed out that Government will have to pay interest on the $331 million it intends to borrow in the next year and that the interest bill would have been less had Government been able to reduce its borrowing requirements.He also said officials would have to direct valuable resources to chasing up the debt.“Does this also mean that Government is going to have difficulty collecting all the revenue it has estimated it will earn this year? It certainly raised that question,” Mr Simmons said.Government has estimated that almost 37 percent $320 million of its total revenue for the year will come from in payroll tax, making it the biggest contributor to Government coffers.