Most of these tax problems can be mediated through a new social contract. 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. 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.
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 thin line between tax evasion and tax avoidance is irrelevant, because both have a negative impact on the economy. 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. It is regarded as the art of winning a game without actually cheating. It is a problem, because it nibbles away at the edges of the tax base, resulting in a lower government share of revenue. Tax avoidance, on the other hand, is the deliberate act of the taxpayer to pay less than what is legally required.
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. Simploy put: Taxes are paid to facilitate the efficient operation of a society. It is now time to give the government what is due to them. Inspired by John F Kennedy’s famous quote: “If not us, who? And, if not now, then when?” Our tax system plays an integral role in funding the public goods and services on which we all rely in Namibia. This calls for bold visions from all, a rearrangement of priorities, and a collaborative national effort. IT IS A new year and the fight against tax evasion and impermissible tax avoidance is on.
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