Joel Tan-Torres, Commissioner of the Bureau of Internal Revenue in the Philippines has offered reasons why it is so hard for developing countries to collect tax. He says:
- Too few staff
- Staff too lowly paid so high turnover
- Poor IT
- Slow speed of enforcing action through the legal system.
- Problem of special interest tax provisions
- The aggressiveness of the tax industry in promoting avoidance bordering on evasion. Tax evasion is at least 0.03% of GDP in the Philippines — which seems surprisingly low to me, but then so is the tax yield.
In many ways this sounds like the UK but let’s have no doubt. In terms of scale everything is worse.
What he needs he says is information. Internally generated sources are not enough in the current world. He appears to be asking for automatic information exchange, but without being specific. What he does say is that expertise will need to be developed to make this work.
Volume issues regarding information will need technology support — but it’s clear, it’s our job to do this. This has to be a key component in the development agenda.
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Not to forget:
1. Extreme poverty
2. Shanty towns
3. Widespread corruption of government officials
4. Complex social – political structure
5. Guns on the street
It is a different world over there Richard, nothing like the UK.
@Billy
Sure – you think he does not know that?
As do the other developing country people here – so we’re very, very real and it’s you who is making the excuses for inaction
Why are you doing that?
I nearly fell off my seat in disbelief at Billy’s comment.
It’s this type of ignorance I am confronted with day in, day out as an excuse to continue promoting the destruction of real economies, especially in those countries where there is most to gain, those with high levels of natural resources. I reckon there must be a handbook out there:
“Respond to calls for greater tax transparency thus:
1. Extreme poverty
2. Shanty towns
3. Widespread corruption of government officials
4. Complex social – political structure
5. Guns on the street
It’s their fault, not ours.”
I take it, Billy, that you don’t know the first thing about OFC business?
I took out an MD of one of those firms establishing an “opportunity” for South African “investors” out to dinner, during my first couple of years in the industry. Got him drunk on peach schnapps, each to their own. If I knew then what I knew now I would have pressed him harder, seeing as he was so proud of himself, but the seeds were sown.
Dirty and sordid are words that spring to mind when describing those with nothing with words that make them sound like savages. Just like he did about the blacks in his country. Just like he did when he thought it was funny for his clients to hide their pathetic estates in pathetic paper piles in a pathetic jurisdiction where I live.
Yeah, Billy, in the UK, whilst the finance industry was booming, child poverty rose. Very noble.
Very civilised.
edit:
Dirty and sordid are words that spring to mind when describing those that can describe those with nothing with words that make them sound like savages.
Richard,
Joel Tan-Torres gives reasons for the (poor) tax-collection record in many developing countries.
So where is the link between dismal tax collection practices and your “Why tax evasion” title ?
If tax collection is so badly managed, why would people evade taxes ?
Could it be that Billy has a point, e.g. that lack of economic freedom, political instabiliy, absence of independent courts and of a free press, absence of mature financial markets and domestic investment opportunities, unstable macroeconomic practices, poor governance, prevalence of crime, high-inflation, brain-drain, etc., explain flight capital, and hence tax evasion ?
Recognizing those conditions is no excuse for inaction, but may indicate that a country that bases its development on human and economic rights, and cares after its physical and socio-legal infrastructures, has a high chance of negating flight capital, and as a result improve its tax collection record.
Bernard
@Bernard
A relevant question. I met Joel Tan-Torres yesterday
But you’re wrong about causation. The problem is lack of resources – especially poor pay in revenue departments and the willingness of big firms of accountants to pay more and undermine the process
If we support tax authorities with direct funding and technical support then the rest follow
It’s chicken and egg. You have the ordering wrong. the rest flows from a good tax system