Debunking the popular opinions of most citizens in countries far and wide, tax is more than just a source of revenue and growth. It also plays a key role in building up institutions, markets and democracy through making the state accountable to its taxpayers. Just as excessive tax burdens might hinder growth in wealthier countries, in developing economies a lack of tax structures is a major cause of weak, unresponsive governance. It also leads to an over-reliance on aid. With tax, the public can hold governments to account for their decisions, and not feel tied to the will of aid donors. And because tax revenues are relatively predictable, governments can plan ahead with greater certainty.
Tax is undoubtedly important because not only does it make citizens responsible in a little way for their country, it is also a reasonable way to include citizens in the affairs run by the state and country as a whole. Tax is one of the essential functions of government and a fact of life for taxpayers includes compliance and planning.
As developing countries, yes, we need aid and will continue to do so, but tax payment could pose a very convenient measure to help strengthen our tax capacity, increase our autonomy and reduce their long-term dependence on external assistance. This idea is not new. Indeed, rich and poor country governments have agreed on the importance of tax for development for years.
However, recognising the importance of tax is one thing, improving its impact and operation is another bearing in mind cultural barriers, institutional weaknesses, and corruption, as well as international factors including capital flight, aggressive tax planning and trade pressures.
Strengthening and improving tax administration will not happen overnight. In the meantime, the pressure on tax must continue, the only correction that should be looked into is the corruption of misusing these funds and I feel that that’s a key area where citizens have issues and not the tax payment itself. If taxes on income flowing to these jurisdictions were collected by the rightful authorities, then billions of dollars would become available to finance development. Hence, creating more zeal and enthusiasm on the side of the tax payers. Everybody will be happy.