No one can evade paying taxes- says renowned Economist
01 mart 2018, 10:47
In recent years, Tanzania has been pushing for the realization of an industrial economy come 2025. However, this can only be realised with a steady tax collection. Azania Post’s Patrick Kisembo caught up with the Managing Director and Tax Consultant of Leon & Viann Associates, Viann Komba. Here are excerpts;
Qn. Can you introduce yourself please?
Ans. My name is Viann Komba and I have been in the field of tax management for a long time. I have been a consultancy, a teacher, a lecturer in economic and public finance.
Qn. How do you see the economic situation of Tanzania since President John Magufuli took office in 2015?
Ans. What I see from President Magufuli is purely good that is what I can say. He is classic, real and performing wonders because currently there is full hope on economy and many people have hopes on Magufuli’s economy.
Qn. Are there any issues that can be pointed out with regard to tax?
Ans. There are lot of issues to address, but one of it is the taxation mood among the people in this country. Most people are now paying taxes and that is attribute to what we call transparency. Transparent is very crucial when it comes to issues of taxation. People are talking of seven canon of taxation, but the first one is equity, that people who have less should pay less tax and those with more should pay more tax. In the past, there was nothing like equity on tax payment. Anyone who would have cheated used the chance to cheat.
Qn .Why did this used to happen like that?
Ans. This used to happen because there were many loopholes. People used to use big names to evade tax payment, there was also cheating on tax payment. People were not ready to pay tax and that has been going on for quite a long time. But since Magufuli came to power, I have seen what he has done for the country. Magufuli has been working hard to ensure everyone who is supposed to pay tax should pay, even the poor there should equity, equity equity.
Qn .What do you mean about equity?
Ans. For Magufuli, the equity is not only being done, equity is actually being administered. Our friends somewhere will tell you that my right should be seen to have been done. Magufuli has cultivated this heart of paying taxes automatically because now most people are seeing by their own naked eyes that people are paying taxes. They can now prove that there is nobody who is not paying tax. But when you immediately realise that some people have been speared, some people have been left out of the net, some people are actually enjoying without paying taxes, most of the will try to get their change or avoid paying taxes.
Qn. Okay, then what exactly used to happen before Magufuli came to power.
Ans. Before Magufuli, the tax watchdogs were there but nothing happened. Now since he came in we are becoming optimist of how people can pay tax voluntarily. What I saw Magufuli doing from the world go…was, dismantle if you like to call it. To dismantle the groups of people in this country, there were groupings like yellow, green or red and those groups used to operate even at the airport where if you are in red group you would be investigated at the very port.
If you are in green, you can take and pass with anything you have with you because they will come home, If you are in yellow you are important and can either inspect you or not. Now most of the people would jump and associated with green colours’ group. Then, other people would see from the distance that those people are not paying taxes, so they will work out on their own ways to avoid paying taxes. But now those groups are no more.
Qn .Where are they, have they been dismantled?
Ans. They have all been dismantled and that is what make me envy Magufuli, there is nobody who can say now ‘I am superior to tax. Unless otherwise you are lucky. But as long as paying taxes is concerned…Magufuli will take you anywhere you like, and that is the most important part of the business. You either allow people to pay tax transparently and people should be seen, seen, seen by their own naked eyes that tax has been paid. That encourages them to continue paying taxes. But if you allow groups, some are favored and others are not. Those who are not favored will work out their own way around to make sure that they get into the group of the favored.
Qn. How do we get out of this situation, that those who are not rich, the poor should pay tax. Don’t you think they is a feeling in the society that they are being milked?
Ans. That feeling is naturally a natural hatred to pay tax, people don’t like paying tax. Saying we have poor people who are not—who should not pay taxes is wrong because most of the people are actually poor. If we decided people should not pay tax then nothing will happen. Because the way taxes have been structured is in such a way that those with little will pay little. Those with more will pay more, but we must pay anyway. But then, the people are in hurry to judge the government they don’t think along these lines. They only think that I am paying tax, I have been paying taxes therefore …I mean even if you ask them who exactly should pay taxes, they cannot tell. Most will tell you ‘I was not supposed to pay tax’. But if you ask honestly who should pay tax and why you shouldn’t pay tax they will not tell who to be taxed and who should not. People who have zero do pay zero, but immediately they start having something, they must pay tax.
Qn. What is your general comment on the way lawmakers backup the low-income earners ---say with reference to South Africa reaction of the VAT. What should you as an economist advise the government.
Ans. My own economics tells me… goes back again to the same thing that taxes are hated. There is big and serious hatred for taxation. Even if you raise a single percent…people will complain. But, economists and lawmakers have tried much to ensure that people with less pay less and that is the most important part of the business. To ensure that people with less should pay less, people with nothing should pay zero, all this depends on tax base change.
Qn. What tax base change?
Ans. Now, when it comes to changes of tax bases rates…they all depend on the demand for the revenue for the government. You cannot avoid that. If the government finds or feels that it has little or no money, the one straight and direct way, quick one is to play around with taxes. Unfortunately, the tax bases are almost exhausted in many country like ours.
Qn. What do you mean exactly that tax bases are exhausted?
Ans. It is very difficult to increase the tax base in this county because whenever you look to the tax base…like if you think of taxpayers most of them are in the net. The ones…those who have nothing to give or otherwise they may get lost, they may even change their names in such a way that TRA are now taking finger prints, pictures to monitor them. But, people can still change names, or even use their children, this is what Chinese people do. They do business in a company for one-two years, then they close down and start another one with a different name. So, increasing the tax base is actually what the government is working on daily to ensure that more and more comes in a net. But it is not all that easy, the easiest thing is just to increase tax rate, but then you realise that you don’t reach the target, you don’t get enough revenue, tempting, tempting…it becomes very tempting