Tax justice is a prerequisite for rebuilding trust between the government and taxpayers
Tax justice refers to ideas, policies, and advocacy that aim to achieve equity and social justice through fair taxation of the wealthiest members of society and multinational businesses [1].
To this end, tax justice often focuses on dealing with tax havens (those who do not pay according to the law, domestically and abroad) and curbing corruption and tax abuse by wealthy and super-wealthy businesses and individuals.
Tax justice includes dealing with tax incentives, but it also goes beyond that, as it is also linked to the poor administration and corruption that keep tax evasion strong.
To this end, tax justice often focuses on dealing with tax havens (those who do not pay according to the law, domestically and abroad) and curbing corruption and tax abuse by wealthy and super-wealthy businesses and individuals.
Tax justice includes dealing with tax incentives, but it also goes beyond that, as it is also linked to the poor administration and corruption that keep tax evasion strong.
For jurisdictions like Albania, the problems of tax evasion and tax policies captured by interests of businesses and wealthy individuals are key to understanding tax distortions. This debate about tax justice is even beyond taxes and includes preferential laws in the areas of financial regulation, criminal law, accounting, economics and much more.
The relationship between taxes and human rights is complex.
Without taxes, states cannot fulfill their human rights obligations. Human rights at the same time limit the range of permissible tax policies[2].
In this context, is it possible to apply the principle of non-discrimination when analyzing the compatibility of a tax system with human rights?
Is there a connection between tax regressivity and discrimination?
Regressive taxes take a larger share of income from low-income earners than from middle- and high-income earners. As such, the tax burden decreases with regressive taxation as income increases. It contrasts with a progressive tax, which takes a larger percentage from high earners.
The term regressive tax refers to a tax that is applied uniformly regardless of income [3]. Regressive taxes take a larger share of income from low-income earners than from middle- and high-income earners. As such, the tax burden decreases with regressive taxation as income increases. It contrasts with a progressive tax, which takes a larger percentage from high earners. Common forms of regressive tax system include VAT, property tax, and payroll tax.
The current tax system is considered regressive based on the part of regressive taxes that currently make up most of the budget (VAT, excise duty, fees and non-tax payments including fines and late interest, property taxes, flat capital tax to the greatest extent 15%, payroll tax at most 13%, fines and penalties).
But do we really have a progressive tax after 10 years of political declaration and noise flat tax and progressive tax?
Some aspects of the taxes listed above relate to a regressive tax system. Consumption taxes (42% of tax revenue), property taxes and other taxes and fees (11% of tax revenue) are often regressive.
But the biggest problem of a tax system, regardless of its composition, is the informality of the economy and the possibility of tax evasion.
If tax benefits and exemptions (political targets) are added to the lost income from tax evasion, then the tax system becomes insensitive to any tax reform, no matter how well it is designed.
The tax system in Albania has exactly these symptoms which convey to the public the feeling about government that exist:
– pronounced lacks maintaining balances of justice and equal tax treatment,
– strong problems with sincerity and clarity in the implementation of the social and economic contract with the public,
– indicators of weak effectiveness in the implementation of laws in force, as well as
– it does not assure young people and other taxpayers that it is in their economic interest to contribute to taxes and taxes should be spent in their interest.
Tax evasion, which is still not known how much benefits to the disadvantage of Albanian taxpayers, has been challenging the tax system for many years deliberately by not respecting what a large part of taxpayers does. This disregard for tax legislation is at the same time a disregard for contributing to the many services and benefits they receive from tax payments from paying citizens, undoubtedly inciting a social conflict that grows daily.
From the reactions of citizens and businesses that we surveyed throughout the year 2023 through our daily work in communication with them, we notice that citizens do not avoid taxes only because of possible personal benefits, which the system with the inability to act has allowed them.
Moreover, they believe that the state is unable to properly allocate public money and that the current political and tax system is inefficient or corrupt. Consequently, comprehensive, and comprehensible transparency for taxpayers is of immense importance for them, so that they believe that their contribution to public revenue is important and necessary. Therefore, it is especially important that the governance should act willingly based on a legal framework that does not change according to the government’s own interest, but that holds politicians accountable for their decisions and actions regarding the management of public money. The rebuilding of trust between the government and citizens is the only solution that increases the value of the good name, as an asset that also re-evaluates the value of the government. It must be based on the uncorrupted will to fight tax evasion and dirty money, and this is where the efforts of the current political system must be focused.
In conclusion, the state must gain the trust of citizens to increase tax justice and fight tax evasion, allocating its resources efficiently and promoting political transparency.
[1] https://taxjustice.net/faq/what-is-tax-justice/
[2] https://www12.senado.leg.br/ril/edicoes/58/230/ril_v58_n230_p219.pdf
Leave a Reply
You must be logged in to post a comment.