Don advises against sparing the rod on tax evaders

21Apr 2016
Victor Karega
The Guardian
Don advises against sparing the rod on tax evaders

THE natural order of things dictates that government failure to rein in firms that evade taxes hurts state coffers and in the process guarantees loss of much-needed revenues for development projects.

Commissioner General of the TRA, Alphayo Kidata

No need for a wide stretch of the imagination there thus in the grand scheme of things, the proverbial ‘spare the rod, spoil the child’ wasn’t richly embroidered after all because experts have likened tax evasion to larceny, or the whereabouts!

Prof Odd Helge Fjeldstad, Executive Director of the Christian Michelson Institute (CMI), said the refusal to pay taxes by companies was tantamount to stealing and the government should take tough punitive measures against the perpetrators.

He stressed that whoever steals money from the government should be forced to pay it back so that it would in turn benefit the community for national development.

Prof Fjeldstad, who is also a researcher, warned that such malpractices could lead to overburdening other taxpayers with higher taxes and also could cause high inflation, which will have serious economic impact on the consumers.

He said: “The more you encourage or simply allow such practices to flourish, the more you should expect to have inefficient companies and thieves wantonly milking the country and this will lead to a very unproductive economy.”

He added that if the tax collection system is streamlined and more auditors are recruited to monitor VAT payment trends, then the Treasury would boost revenues to acceptable levels.

He noted that in Tanzania, there are currently many registered companies and institutions that are not fully complying with the procedures of tax and VAT policies.
Earlier, TRA Commissioner General Alphayo Kidata (pictured) said the tax collector will continue with its investigations into the operations of container freight stations to stem out tax evasion.

He told this paper that the ongoing investigations are part of a nationwide campaign to enforce customs regulations and seal revenue leakages.

“Further action will be taken in respect to those found breaching the law by engaging in transit diversion, smuggling and other fraudulent practices,” Kidata stressed.

According to him, TRA is constantly investigating and monitoring cargo and human movements in a move that’s aimed at preventing tax leakages and tackling security threats.

In December last year, the taxman confiscated 2,431 containers that had passed through the Dar es Salaam port without taxes being paid for them. He pointed out that lack of proper surveillance in the past led to the importation of goods without paying relevant duties thus denying the state revenues.

He, however, underscored that TRA is now executing a new management system which has superior equipment that will help in ensuring better practices in risk management, security enhancement and valuation of cargo.

He warned both public and private companies against smuggling and tax evasion to avoid hurting the economy.

“Smuggling also encourages other misdemeanours like corruption, bribery, and also leads to the dumping of poor quality products in the market that can be harmful to consumers,” Kidata stated.

On his part, TRA’s Taxpayers’ Education Director, Richard Kayombo, cautioned the business community against such malpractices, and sought their partnership in overcoming all manners of illegal trade.

Through community policing, traders can always look out for such illegal dealings and alert the police and tax authorities so that investigations can be conducted in time, he noted.