Lower taxes encourage compliance – Habazoka

Thu, 06 Apr 2017 10:13:30 +0000

By BUUMBA CHIMBULU

GOVERNMENT should consider reducing taxes to 13 percent while stiffening penalties for non-tax compliance to enable everyone pay taxes, Dr Lubinda Habazoka has suggested.

Dr Habazoka, an economist, emphasised that Government would be able to collect more taxes if they were reduced to at least 13 percent from the current 35 percent as the public would find it easier to comply.

“The only way to ensure people start paying taxes is to harshen the penalties for non-tax compliance and to reduce the taxes.

“You will be collecting more money from businesses and individuals if we reduce taxes to say 13 percent, because we are currently collecting at 35 percent,” he said.

He said in an interview that countries such as Russia were able to collect more taxes after significantly reducing the tax rate and stiffening the penalties.

Dr Habazoka explained that people would always run away from paying taxes if they were high.

He said this was among the strategies of collecting taxes in the informal sector.

“Countries like Russia achieved that by significantly reducing taxes and strengthen the penalties so that a person says it is better I pay tax because there are laws than face a stiff punishment

“But even if the risk versus return is high and still pay a lot of taxes, then you would rather face the risk than pay the taxes. When people heard they had to provide TPINs, they started withdrawing money because they were scared that Government will impose taxes which is currently high,” he said.