The Bermuda government says it will crack down on tax dodgers who owe it a whopping US$85 million in unpaid taxes.
A Finance Ministry spokesman said 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 10 per cent of governments estimated $871 million revenue for the coming financial year.
In his Budget speech a week ago, Finance Minister Bob Richards acknowledged that many businesses are struggling to pay off their tax bills in a timely fashion because of an ongoing, four-year recession.
He said officials were willing to work with companies in arrears, but would also hunt down tax dodgers in a bid to collect funds.
He said had the US$85 million been paid on time, governments cash flow would have improved considerably, reducing its need for borrowing.
Richards announced that governments debt ceiling was being extended to US$2.5 billion, and that US$331 million will have to be borrowed to cover the cost of running the country over the next 12 months.
The Ministry of Finance spokesman 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, adding that 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 spokesman said.
The spokesman 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 legislative framework.
Those convicted under the 1970 Contributory Pensions Act can be jailed for up to six months and fined US$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 spokesman added.
Chamber of Commerce president Ronnie Viera urged businesses in arrears to co-operate with government in getting the debt paid off.
Thats a significant number and clearly it does impede on governments ability to operate, he said.