Interventions to Reduce Tax Evasion, Avoidance and or Defaulting

By Evans Dakwa

The world over, governments and their respective tax authorities grapple year in and out with the problem of tax evasion, avoidance and defaulting. South Africa. Each and every tax season, some individuals and companies are caught on the red tape of failing to remit what is due to the government. Unknowingly or deliberately for the glaring ones, a considerable number is failing to remit to the South African Revenue Service (SARS).

Simply defined, tax is that compulsory contribution to state revenue levied by the government on workers’ income and business profits and or added to the cost of some goods, services to keep it running.

People and entities evading and or defaulting on taxes has been a recurring problem since time immemorial. How best then can it be reduced and or totally eliminated? What role can the government and the tax authority in this case being SARS play to try and eradicate this problem? What of the taxpaying public?

There is need for the parties involved to work together. The government and SARS on one hand and the working population and corporate on the other, all have a role to play in order to make this troublesome issue disappear or to reduce it per sae. Both these sides are part of the publics’ of tax revenue the former as the collectors and enforcers and the latter as the remitters.

The government on its part has to exhibit the highest levels of transparency as part of the measures to reduce evasion. There is need for crystal clear transparency. The tax paying population in the country need to understand how the money remitted to the government is being used. Accountability has to be the order of the day on the part of the government to encourage people to willingly pay their tax.

Transparency will help to eliminate the thought of tax payers remitting taxes to support the posh livelihoods of government officials. Eliminating this thought and doubt in their minds will be a catalyst in encouraging people to religiously pay their tax dues as and when they are needed. Let’s face it; some people just default because they feel the money is being misused by politicians. Issues like Nkandla that create doubt and suspicions in the public domain should just be a thing of the past.

Secondly, the tax authority being SARS have to embark on a well thought out public relations drive. Some people are just not aware of why they should be paying their earnings to the government. This is where SARS come in to conscientise people on the importance of them paying tax. They need to be aware of the fact the revenue collected from tax is the pinnacle of a functioning state. They need to know that without tax revenue, there won’t be free public hospitals, world class roads, and Anti-Retro-Viral drugs for HIV patients, public parks and libraries.  The positive impact of taxation has to be heard and felt.

The tax authorities also have to make it a point to make the public understand the tax laws. Some people default not because they want to but because they simply do not understand some of the complex tax laws. Some end up taking exemption even when they are supposed to pay. The tax authority has to roll out programmes to make sure all in sundry are aware of tax laws and the taxpaying public must also do likewise.

Just like in any society, there are some individuals who will never listen to the voice of reason to willingly pay their tax. These are the elements that must be reminded of the dire consequences of failure to remit which include arrest and possible jail time and a criminal record hanging above your head for the rest of your life.

Tax evasion is difficult to eliminate totally, but the above rank among some of the interventions that could drastically reduce the rate.