Opposition Leader Grant Gibbons hit back at statements by Finance Minister Paula Cox defending the Bermuda Government's financial record yesterday, calling her claims “grossly inflated” and “complete spin”.

Ms Cox gave an impassioned defence of Government's financial practices in the House of Assembly on Friday, defending their record against media coverage on the most recent Auditor General's report.

Saying media reports would have been greatly assisted by background research to put the issues in context, Ms Cox stated Government has placed a high priority on collecting outstanding pensions contributions and taxes arrears.

However Dr. Gibbons said: “This statement makes Government out to be paragons of virtue but in fact the truth is the director of Social Insurance and the Tax Commissioner have persevered and done their best in spite of the lack of adequate support from the Ministry of Finance and certainly in spite of the total lack of co-operation from the (politically-appointed) Attorney General's chambers.”

He cited the Auditor General's report where it was noted that collection procedures have improved, however: “Their collection efforts have suffered because of lack of full support by the Attorney General's chambers and the Ministry of Finance.

Dr. Gibbons said Government has done a “complete about face” on the policy regarding overspent budget appropriations, which the Auditor General's report referred to as “illegal expenditure”.

Ms Cox took exception to that term, pointing out the Constitution states any money spent by Government which was not allocated for in the Budget that is “required or spent” must be brought before the House of Assembly.

She said it was clear money may, in some circumstances, be spent before approval from the House is obtained - for example in emergencies such as Hurricane Fabian. “However once the approval has been obtained it is illogical to refer to that expenditure as ‘illegal' ... it is more properly and accurately referred to as unauthorised expenditure.”

Dr. Gibbons said it appeared Ms Cox was trying to rationalise, however. He said indications that departments would be over budget had appeared in the last few years, “but they did not come to the legislators beforehand ... and simply went ahead and spent the money.”

That was contrary to the position put forward by former Finance Minister Eugene Cox in the 1999-2000 Budget Statement, he said.

Mr. Cox stated that during the previous fiscal year “significant items of unbudgeted expenditure” had resulted in “the requirement to seek the sanction of the Legislature for several items of supplementary expenditure, in accordance with the advice of the Auditor ... This is also in accord with Government's pre-election platform which indicated that public funds will only be disbursed when properly authorised and accounted for in accordance with the appropriate Parliamentary processes.”

The Attorney General also supported that position in 1998, Dr. Gibbons said. “This is a 180-degree turn from where they were a few years ago ... Expediency has taken over from the original principle.”

Dr. Gibbons noted other “inflated” assertions in Ms Cox's statement.

Ms Cox said it was under the PLP that the Tax Commissioner's office was allowed to conduct audits of delinquent tax payers, one of the reasons for the seemingly large increase in payroll taxes owed between 2002 and 2003.

However Dr. Gibbons said audits have been conducted for Hospital Levy and Employment Tax since 1976. The two were combined into payroll tax in the early 1990s.

Ms Cox also said the Department established a Debt Management Section in 2002 to help collect debts. They also set up instalment plans and are supported by Immigration and TCD, who withold vehicle license/work permits until arrears are paid.

Dr. Gibbons said prior to 1998 when most taxes were still accounted for in the Accountant General's office there was a Debt Collection Office there. Most taxes were moved to the Tax Commissioner's office in 1998/99, meaning the “new” Debt Management Section could just be spin because the name of the section changed slightly when it was relocated to the Tax Commissioner's Office. He also said both the instalment plans and practice of witholding permits have been in place for years.

Ms Cox added the Pension Commission has resolved to bring recalcitrant employers to court if they continue to flout legal requirements regarding private sector pension schemes.

Dr. Gibbons said that concern belonged with the Department of Social Insurance, where employers are deducting money from employee wages but not passing that on to the Department. The Pension Commission is a different issue.