The activities of the Tax and Customs Board in collection of tax arrears need to improve

Toomas Mattson | 10/1/2009 | 12:00 AM

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TALLINN, 9 October 2009 - The National Audit Office believes that the Tax and Customs Board should make its debt collection more efficient – they should react more quickly when debts appear and guarantee equal and fair treatment of tax payers and also reduce the turnover of staff among tax collectors. According to estimates, more efficient debt collection would have raised an extra 150 million kroons in tax revenue for the state in the second half of 2008.

The audit conducted by the National Audit Office showed that debt collection starts too late and collectors are unable to deal with all debtors and each of them has to handle several thousand debtors. The main reason behind the problems in the collection of tax arrears is that the Board has not paid enough attention to the development of tax collection in previous years. The strategic decision made by the Tax and Customs Board in the times of economic growth was to increase tax obedience by improving its service quality rather than forcing payment and it means that not enough importance has been attributed to the collection of tax arrears. The approach that was built on service quality has been put under pressure by the recession and debts have grown fast.

The audit only focussed on such cases of debt that should have definitely been collected if the debt collection activities of the TCB were more efficient. The results showed that the amounts owed did not decrease in 12 months, but tended to increase instead.

The director general of the Tax and Customs Board did not consider the opinion and observations of the National Audit Office and the recommendations made on the basis thereof to be relevant and insisted that these problems are in the past and the developments made in the information system of the TCB from 2007 to 2009 and changes in the organisation of work are sufficient for resolution of the problems.

Director of Audit of the Performance Audit Department Tarmo Olgo says that tax arrears have been growing over time and this growth will continue strongly due to the unfavourable economic situation. “I am concerned about the attitude of the TCB and the Ministry of Finance that the new information system that has only been partially implemented by today can solve all the problems found during the audit. Approaching debtors and their situations individually is correct in principle, but it is not fair when companies that always pay their taxes properly and in time are thereby placed in a situation that is equal to that of a debtor," added Olgo.

The recommendations made by the National Audit Office proceed from the firm belief that the government must support business by offering measures suitable for supporting business and by designing tax policies rather than offering credit on account of taxes to some companies that have been selected on entirely unclear bases.
The Ministry of Financed has admitted the problems and in accordance with the recommendations made by the National Audit Office, it has allocated the TCB an additional 3 million kroons for completing the development of the debt processing information system. However, the director general of the TCB believes that it is not enough to complete all plans.

Further information: Audit Manager Urmet Lee, tel. 6400751

Toomas Mattson
Communication Manager of National Audit Office
Telephone: 6400 777
Mob: 51 34900

  • Posted: 10/1/2009 12:00 AM
  • Last Update: 8/28/2015 8:57 PM
  • Last Review: 8/28/2015 8:57 PM

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