Tax Evasion: The Urgency of a Supervisory Entity
Five years after the revolution, the economic situation in Tunisia is ever more deteriorating. According to the National Statistics Institute (INS), inflation is at 4.2%, the commercial balance is in deficit at 12,047.7 MD and the unemployment rate reaches 15.6% at national level, with figures that are yet far more alarming in the regions (30% in Tataouine, 24.4% in Gabes, 20.6% in Kasserine). All economic indicators are into the red, in particular at the financial level. Tunisia is crushed under a debt that amounted to 69% of GDP in 2016, and could reach 71.4% of GDP in 2017, according to forecasts by the International Monetary Front (IMF).
It is an imperative that Tunisia mobilizes new resources to restart the economy and face the debt maturities [source].
According to Samir Cheffi, Deputy Secretary-General of Tunisia’s General Labor Union (UGTT), tax evasion in Tunisia represents 5 to 7 billion Dinars every year. This amount would be equal to the cost of debt service.
Tax evasion is the taxpayer’s behavior that aims to minimize the income reported, either by legal means – it is then called optimization— or by illegal means – which means tax fraud.
The government has decided to take action to reduce the huge shortfall triggered by tax evasion. This translated as the third pillar of the 2017 Finance Bill, which notably comprises setting incentives to file declarations before December 31, 2017, without accountability or penalties. Besides, the 2017 Bill contains incentives to declare land transfer or business capital contracts, in order to better control real estate gains. While encouraging, this will not be enough, according to expert Hichem Mohamed Abjouni, who considers that contracts of car transfers and rentals must also be subject to this reform if the truthfulness of declarations of everybody’s goods is to be ascertained.
Among the actions taken by the Finance Bill is the creation and establishment of a tax police whose mission is to detect tax infringements and to bring the accused to justice. The Bill does not mention how many members would be part of this new body within the Directorate-General for Taxation, which will carry out its activity under the auspices of the state prosecutor. At this stage, it is difficult to evaluate the impact of this measure.
But it is not enough to reinforce the unit of tax inspectors to fight against fraud. An independent body must be created, composed of experts who could be nominated by the Anti-Corruption Body and would be funded by the Ministry of Finance. Its role would be defined in the framework of a national strategy to fight tax evasion. This body’s main mission would be to establish a system of control and of permanent watch in the framework of a tax reform.
With an exponential corruption index, this body should have the largest possible scope of intervention. Because the fight against tax evasion is not only a moral duty of the State. Each citizen must be conscious of the importance of paying due taxes to enable the State to guarantee the population basic services such as education, health and infrastructures that are necessary for the country’s development.
Article translated from French. Read the original here.
This advocacy piece is part of the NET-MED Youth Creative Circle initiative.
Abdel Aziz Bousleh is 23 and is a graduate student in management and strategy at the IHEC (Institute of Business Studies) in Carthage, Tunisia. He has a bachelor’s in logistics and international transport from ISET (Institute of technology) in Rades. Abdel Aziz’s civil society experience started in 2main tu crées in 2013, an association he is representing within NET-MED Youth. He spent one year (2015) as a Logistics Manager at the International Institute of debate. He is a co-founder of Sawty-Tunis and secretary general of the environmental club HEC’AEGIS Managers Responsables.
*The ideas and opinions expressed in this article are those of the author and do not necessarily represent the views of UNESCO or those of the European Union. The designations employed and the presentation of material throughout the article do not imply the expression of any opinion whatsoever on the part of UNESCO or the EU concerning the legal status of any country, city or area or of its authorities, or concerning its frontiers or boundaries.*
Activities building skills among youth organizations and young journalists; to enhance youth representation in media and promote freedom of expression, media and information literacy and youth-generated media content.
Activities joining youth organizations, employment experts and different national stakeholders to engage in dialogue and work together on unemployment solutions and skills needs.
Activities empowering youth to participate in the communal and national development, revision and implementation of national youth strategies and public policies.