13446: Durban on Proposed Visa Tax (fwd)

[Bob Corbett <corbetre@webster.edu>]

From: Lance Durban <lpdurban@yahoo.com>

Reports that the Haitian government is now planning to 'tax'
visitors up to US$100 for a visa depending on nationality is
troubling.  It seems to be an effort to grab the proverbial 'low
hanging fruit', rather than the far wiser decision to fertilize
the tree on which the fruit grows!

Our own modest-sized Haitian electronics company is hosting a
much sought after visit by a customer to audit our quality
systems in November.  Their three member team will be in for
three days, and I am not looking forward to advising them that
they will now need in an extra $100 cash each just to get into
the country.  (We have already told them about the $30 exit
tax).  My sense is that the Haitian government overlooks the
many thousands of dollars paid directly to our workers each
month in the form of payroll as a result of such foreign visits.
 And such visits are absolutely critical in attracting new work
for us.

Besides the local payrolls created which go directly to Haitian
workers, Haitian employers (including us) pay the Haitian
government a substantial payroll tax calculated thereon.  SOME
of this payroll tax is deducted from the workers' salaries, so
some may feel that a visa tax is 'fairer' since it, presumably,
is being paid by people who can better afford it.  That's a good
point, but there are ways to create a 'fairer' tax system which
do not make such a big and direct hit on your ability to attract
foreign investment (and tourists).

Back in January of this year, (Corbett #a496) I made some tax
recommendations for Haiti.  A boring, but critically important,
topic and I take the liberty of pasting in a relevant excerpt
from that earlier post:


             ----REDESIGNING A TAX SYSTEM----

 To the extent that any government is financed by taxes, it is
 financed by the people who pay the taxes.  In Haiti, this can
 only be people who have the wherewithal to pay taxes.  For the
 most part, that means people who own vehicles, who have a bank
 account, and who own a house with indoor plumbing.  To the
 extent that these are not Lavalas "pep-la", there may be an
 additional problem:  For a tax system to work well, it must be
 seen as fair to all and not be driven by politics.  It needs to
 be relatively simple to administer and imbued with a degree of
 "transparence" that make it difficult for both dishonest
 taxpayers to slip by and for government collectors to collect
 bribes.

 Since the biggest bucks will necessarily come from the people
 best able to pay, let's concentrate on assets:  bank accounts,
 vehicles, and real estate.    Taxing Haitian bank account
 balances would encourage capital flight.  Since there is no way
 Haiti can control offshore accounts in Miami, Switzerland, or
 anywhere else, we have to rule that out.  Registered vehicles
 are already taxed via licensing fees, so that leaves taxing
real
 estate.  Now, there is a property tax in Haiti, but unlike in
 the States, my impression is that there have been very few tax
 foreclosures.  Instead, we have periodic chatter about land
 reform, something that sounds a lot like legalized theft to
most
 land-owners.

 I would contend that the best thing the Aristide administration
 could do in the remaining four years of its mandate would be a
 restructuring of the Haitian tax system, basing it on a
 universal property tax.  Presently, it is the responsibility of
 landowners to keep their "papers" proving ownership, and
judging
 by the many ownership disputes, my guess is that government
 records are haphazard in the extreme.  They wouldn't have to
be,
 and creating a nationwide database would help.

                  ----WHERE TO START----

 Here is one project candidate for an IDB bank loan that I could
 support, since it would create the system needed to repay the
 loan.   Phase one would be a "projet de cadastre", an
 inventorying of who owns what, surveying disputed property
 lines, and getting the entire thing computerized.  To keep it
 manageable as well as focused on tax revenues, my phase one
 would omit both land parcels and houses below a certain minimum
 size.

 Phase two, running simultaneously, will involve creation of a
 revitalized legal system for every aspect of land ownership in
 Haiti.  From recording of deeds, to assessing of property, to
 mechanisms for protesting assessments, to tax collections and
 audits, to following up with foreclosure action on properties
 for which taxes are seriously in arrears.  We're talking a
 massive overhaul bringing Haitian property registration into
the
 computer age.

 Phase three is the actual implementation of the system on an
 area of limited size, with a time line for extension to other
 major metropolitan areas.  Close monitoring of implementation
is
 key.

 Such a major nuts and bolts project is by itself apolitical,
and
 ought to be something that all parties in Haiti could agree
 on...
             *********************************

Good advice back in January and equally valid today.  But this
is the 'heavy lifting' part of good government.  Unfortunately,
it seems that the easier (albeit, short-sighted) idea of simply
demanding money from all foreigners who de-plane in
Port-au-Prince may be about to carry the day.

Lance Durban
October 27, 2002


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