UHWI tax debt raises questions about ministry’s oversight

Economist Keenan Falconer says the more than $40 billion in tax, interest, penalties and surcharges for which the University Hospital of the West Indies (UHWI) is liable represents approximately 15 per cent of the total stock of arrears due to Tax Administration Jamaica (TAJ).

At the same time, Damion Gordon, lecturer in the Department of Government at The University of the West Indies (UWI), says the tax liability issue at the UHWI points to broader concerns about oversight and accountability at the level of hospital administration, also the parent ministry.

According to Falconer, it was imprudent that obligations could have been delinquent for so long that interests, penalties and surcharges eventually exceeded the original principal tax arrears balance.

To the extent that arrears remain collectible, the economist argued that every avenue should be exhausted by the UHWI to comply with its tax obligations in the shortest possible time. He said the relevant authorities should also continue to be empowered and appropriately resourced to carry out its mandate to collect where practical and feasible.

Fiscally, the situation is not ideal, as having large stocks of tax arrears complicates fiscal planning, Falconer reasoned, adding that this could result in overestimating revenue forecasts and projections, which could then lead to fiscal underperformance if outstanding sums remain uncollected.

“In the past, a large stock of tax arrears has resulted in the government overbudgeting money for expenditure with the expectation that entities will discharge their tax liabilities on time and in full, but eventually underspend if that doesn’t materialise. In some instances, that then necessitated further fiscal measures to fill any potential shortfalls arising from non-collection of arrears,” he said.

EXPECTATIONS

Gordon told The Gleaner yesterday that, given the scale of UHWI’s operation and its importance to the public healthcare system, it would be reasonable to expect that issues of this magnitude would have been identified quickly and addressed much earlier.

“We are now forced to place under the microscope the reporting and monitoring mechanisms that the Ministry of Health has established to ensure that its agencies are compliant with standards and expectations,” he said.

With the huge tax arrears now coming to public attention, Gordon said what was now emerging is a concerning pattern pointing to serious gaps in terms of the administration and operations of the UHWI.

“We previously learnt about the procedural and the procurement breaches. We are now learning that UHWI has not been fully tax compliant and owes TAJ in excess of $40 billion in taxes and arrears,” he said.

The UWI lecturer noted that, when the hospital’s tax liability is put into perspective, the figure is comparable to the new tax package for the fiscal year and even higher than the budgets for some of the smaller government ministries.

He questioned why this state of affairs was allowed to persist for so long at the hospital.

Gordon observed that much smaller and less significant tax arrears for ordinary Jamaicans tend to trigger enforcement actions, payment arrangements and, in some cases, legal consequences.

“There is obviously a legitimate concern about consistency in terms of how compliance standards are applied by the TAJ,” he said.

edmond.campbell@gleanerjm.com