Tuesday March 9' 2004

Taxation without representation

The recent jailing of prominent members of the business community for tax evasion, most specifically for evasion of the newly instituted Value Added Tax (VAT) is a clear demonstration of the sad state of affairs that really is not knew to the business community.
It is a public secret that many businessmen fudge their financial statements to show less profit and reduce or eliminate tax liability, preferably declare bankruptcy after a perfectly profitable year, pay no taxes and skip town to boot. Large international corporations are known to hire battalions of tax attorneys who are paid chunks of money to find loopholes in the tax laws. Businesses can go to great lengths to avoid taxes even where taxation comes with representation.
If you are working for profit, the natural tendency, it seems, is to resist paying the government or anybody for that matter. When you resist all expenses including tax expenses, you are more profitable.
When VAT made its appearance it sent shockwaves in sectors of the business community that traditionally took pride in avoiding taxes by hook or by crook. At first some merchants were repotted simply adopting the tactic of literally hiding from the government. When that did not work, taxpayers devised clever ways of both collecting the VAT and pocketing it or gave VAT discounts to attract customers and issued bogus receipts. It was a matter of time before the newspapers were full of stories of on non-registrations, investigations and your occasional indiscriminate jailing.
“Taxation without representation” came the cry from some quarters. The logic that followed was not paying your tax is punishing the government you did not vote for. When I pay tax to this government that I did not vote for, I am supporting it, and I do not want to, goes the flimsy logic. But then, taxes are usually due whether you like the government or not. No government should be expected to tolerate tax evasion. Only two things are for certain in this life, haven’t you heard…taxes and death. It is a criminal not to pay taxes. However unpleasant, taxes have to be paid or else...
But then taxes could be more certain. Taxes could be reasonable or even fair, God forbid. And tax assessors not be such fearsome gods. You are never on a firm ground with the taxman, it seems. You pay your taxes but it is never final and done with. You could not expect the satisfaction of the matter being final and done with. It remains tentative even after you pay all that there is to pay. You cannot move on with your life, if you know what I mean.
Government employees hardly know that it is the taxpayer’s money that is paying their salary, that the taxpayer is the ultimate employer. Just as true, the taxpayer may have no clue as to what taxes actually do for him. How does she benefit by turning her hard earned money to the government? Nobody tells her anything. There are no signs that declare “ your tax money at work” by road construction sites. The schools don’t teach it, do they? How many people have heard about aid in the form of budget support for the government and the reasons for that? And in spite of all the squirming by everyone when paying taxes, the government hardly collects enough money from taxes to be self-sufficient. It would help if it applied the brakes on the mindless spending by government entities in the third quarter of the fiscal year, simply to avoid returning the funds to the treasury.
If you knew for sure that vehicle taxes, for example, pay to get the potholes fixed, would you be happier paying? You would be more inclined, would you not, if you did not think that your tax money will not ending up in some corrupt government pocket?
That said, it would help, tax collection did not continue to be managed by flipping thru folders from shoeboxes. Computerization is overdue. It is time to come up with tax identification numbers to individuals and businesses. If the computer can spot irregularities and flag the taxpayer for and audit, maybe the taxman will make time to expand the tax base instead of repeatedly banging of the same old heads, year after year. We need a larger tax pie.
What is the holdup? Didn’t we “float a tender” and “award” a project to computerize the tax collection arm of the government? In what black hole is that Tax ID project living today?
 

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