The Government last night unveiled its promised crackdown on tax defaulters, promising to first pursue the largest, wealthiest delinquents - some 6,000 businesses and 5,000 high-end property owners.

The Ministry of Finance, in a statement, delivered an unwelcome early Christmas present for some, as it pledged to go after the 600 businesses “with the largest apparent discrepancies” between their Business License payments and Value-Added Tax (VAT) filings.

Noting that these represented 5 per cent of all licensed Bahamas-based businesses, the Ministry of Finance said it will also “courier” demands for extra real property tax payments to 5,000 homeowners in wealthy and upper middle class communities.

The courier notices, which will be sent to both the businesses and property owners, are due to be issued from today, as the Government targets those it believes are “not paying their fair share of taxes”.

The Ministry of Finance statement added that the compliance/enforcement drive is designed to “level the playing field” for tax compliant businesses, thereby upholding the fairness and equity of the tax system while eliminating any competitive advantage gained by tax delinquents.

Simon Wilson, the Ministry’s financial secretary, said in a statement: “Today we are demonstrating our commitment to take compliance with tax and Customs laws seriously.

“We believe this initiative is key to shift the paradigm toward a country where businesses and residents take their tax obligations seriously, and understand that we are committed to compliance and – where necessary - enforcement.”

He added: “Our new revenue management approach affords us the opportunity to analyse and conduct taxation assessments based on data provided by businesses and residents. This process will assist us in identifying businesses and individuals who have not paid their fair share of taxes, and create an opportunity to collect those outstanding taxes.

“We will work with stakeholders throughout to ensure that we are operating in a transparent manner as we undertake this urgent work, and have already begun these consultations.”

The initiative, at least in concept, is likely to be applauded by groups such as the Organisation for Responsible Governance (ORG) and Bahamas Chamber of Commerce and Employers Confederation (BCCEC), who have long called on the Government to undertake greater efforts to collect all revenues due to it.

Indeed, all tax compliant businesses and taxpayers are likely to support such an effort in principle, given that it promises to relieve the increasing burden placed on those who pay their taxes and fees in full, and on time.

The Auditor General has consistently revealed over the past several years the failures of various government agencies and departments to collect the Government’s revenues, and many will now wait to see whether the execution is as good as the idea.

Many observers are likely to be sceptical as to whether those taxpayers with the right family and political connections will escape the enforcement net.

And the Christie administration is taking something of a political risk with the timing of this initiative, given that Christmas is looming and, more importantly, a general election is on the horizon within six months.

Some are likely to interpret the timing as an indication of just how deep the Government’s own fiscal and financial problems are, and its desperation to collect every available cent of revenue due to it.

Tribune Business has heard constant speculation in recent weeks of deep-rooted cash flow problems being experienced by the Government and Public Treasury, although no proof has been provided.

The Government’s difficulties are likely to have increased as a result of the $600 million repair bill, some $200 million of which was not covered by insurance, and the revenue and economic losses, stemming from Hurricane Matthew.

It has already undertaken $150 million in extra borrowing, and the Ministry of Finance alluded last night to the problems caused by the Category Four storm.

“The prospects to reduce leakage of government revenue through the work of the Revenue Enhancement project comes at a time when the country is challenged to rebuild national infrastructure and provide much-needed assistance to the many residents whose homes and businesses were destroyed or extensively damaged by the impact of Hurricane Matthew,” it added.

The project will initially focus on VAT, real property tax, Business License fees and Customs-related taxes and fees.

The Ministry of Finance said: “Analysis reveals that many businesses have a discrepancy between their VAT revenue filing, their Business License filing and, in some cases, their Customs Duty filings.

“As early as November 21, 2016, roughly 600 businesses with the largest apparent discrepancies in their reporting will be couriered notices explaining the discrepancy, and asked for payment or clarification of the amount. These taxpayers represent roughly 5 per cent of the licensed businesses in the country.”

As for real property tax, the Ministry added: “Analysis of real property tax assessments reveals that a substantial number of property owners in the Bahamas are under-paying their true tax liability, either because the valuations are out of date, the properties are misclassified, or they are unregistered entirely.

“In the very near future, the Ministry will courier communications to 5,000 property owners, requesting payment of their additional property tax assessments together with their regular tax bill. These properties are in higher value or upper middle class communities. The value of these properties will be re-assessed, if they were not assessed, during the last five years.”

“In the coming weeks, another round of notifications will be issued to owners of properties that are either not registered for property tax, or misclassified. An example of a misclassification is a business property (a store) that is classified as residential.”

The Ministry pledged that the Inland Revenue Department would work with targeted taxpayers whose homes had been impacted by Hurricane Matthew.

The Ministry added that new Customs procedures were being created, and new container examination procedures implemented.

“Those that reveal material discrepancies between actual content and what is declared will result in the importer of the goods paying the proper Customs duty, as well as a fine for under-reporting, where the misreporting was substantial,” it said.

“Finally, another work stream will involve the completion of VAT and Customs post-clearance audits. This activity involves conducting audits of businesses that analysis suggest may be inaccurately reporting on their VAT, Business License and/or Customs Duty filings.”

The Ministry is thus making good on promises last week by Michael Halkitis, minister of state for finance, who said the Government expected to generate an additional $40 million-$80 million in revenue from the initiative.

Mr Wilson said: “All taxpayers selected for further verification or audit have been identified objectively through risk-based data analysis - not subjectively or at random.

“We remain firmly committed to ensure fairness, compliance and revenue growth. The project team, which comprises a seasoned group of employees of the Government of the Bahamas, supported by external technical expertise, is working tirelessly to ensure that we can effectively implement this vital aspect of our revenue management plan.”