Africa-Press – Namibia. IT IS A new year and the fight against tax evasion and impermissible tax avoidance is on. This calls for bold visions from all, a rearrangement of priorities, and a collaborative national effort.
Our tax system plays an integral role in funding the public goods and services on which we all rely in Namibia. Inspired by John F Kennedy’s famous quote: “If not us, who? And, if not now, then when?”
It is now time to give the government what is due to them. Simploy put: Taxes are paid to facilitate the efficient operation of a society. Let’s be clear about this!
Tax evasion is an illegal method of reducing one’s tax liability, such as filing an incorrect return by omitting or underestimating one’s income, or failing to declare income or providing incorrect information.
It is thus punishable by law. Tax avoidance, on the other hand, is the deliberate act of the taxpayer to pay less than what is legally required. It is a problem, because it nibbles away at the edges of the tax base, resulting in a lower government share of revenue. It is regarded as the art of winning a game without actually cheating.
However, tax avoidance can be deemed impermissible, and is equated to tax evasion if the real intention of the tax-avoidance scheme is to obtain a tax benefit that would not normally be employed for bona fide purposes, if it creates rights and obligations that would not normally be created between persons dealing at arm’s length, or if it results directly or indirectly in the misuse or abuse of a provision of the tax law.
The thin line between tax evasion and tax avoidance is irrelevant, because both have a negative impact on the economy. Both involve a breach of the social contract, which causes significant damage or harm to the fiscal system and the public revenue system in general, as well as direct or indirect losses to all budgetary beneficiaries.
The bottom line is that financial crimes are a violation of human rights, because paying taxes is a civic duty that involves more than just money. When individuals or businesses cheat on their taxes, everyone suffers from poorer public services, the government has less to redistribute, people face greater inequalities, and future generations face the perils of irreversible losses.
Most of these tax problems can be mediated through a new social contract. We live in a time when many people are dissatisfied with the existing social contract and the life it provides.
We can change it if we all pull together! The time has come to rethink taxes in the face of the Covid-19 pandemic and the triple challenge of poverty, inequality and unemployment.
We should seize opportunities to redefine our fiscal social contract and bind together all people’s dreams and ambitions, and to draw lessons from the crisis and be ready to sustain access to essential goods and services, while also being able to pay for future unforeseen circumstances.
The time has come to have a society in which almost everything works, where there is total tax compliance, and where citizens’ tax integrity is abundant.
The time has come to use the power of taxation to assist Namibians in achieving long-term growth and development. This requires inclusive, innovative approaches based on our country’s needs, aimed at leaving no one behind.
Combating financial crimes begins at home, where a cultural shift begins with mindsets to confront our challenges and accelerate progress toward building a prosperous Namibia. The time has come to stop aiding or assisting others in evading taxes, and grossly avoiding, or covering up financial crimes.
Let us start closing the loopholes that tax evaders and money launderers continue to find in order to reduce or avoid paying taxes by strengthening existing laws, and by utilising specially designed tools and strategies. The time is now for the nation to fully comprehend the elements, causes and economic impact of tax evasion.
This is because revenue lost as a result of financial crimes is not spent on productive investments that can have a multiplier effect on an economy and benefit the vast majority of a population, but rather on private lifestyles.
The time has come for tax evasion to be recognised as a serious crime, rather than a victimless one. The veil of secrecy must be lifted, particularly in the informal market, where individuals operate outside the tax net without leaving a paper trail, and where businesses make money without having a significant presence.
The time has come to take up the tax baton with conviction and confidence to have full surveillance over financial crimes, and to embrace transparency and accountability in bridging the information asymmetry between taxpayers and tax authorities.
Although there is no single solution to tax evasion and avoidance, we can ensure that our taxes are correctly collected on time, that revenue is fairly distributed and managed, and that our public expenditure is accountably disbursed. The time is now, and it starts with you.
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