A new study released this week by Rwanda Revenue Authority (RRA) has identified construction firms and hotels to be among the top tax cheats in the country. RRA officials, while addressing journalists on Tuesday, partly attributed the tendency of non-compliance by construction and hospitality companies to the culture of informal employment and non-payment of Pay As You Earn (PAYE). Large construction firms were also found to be deliberately using complex systems to evade taxes. This deprives the economy of badly needed revenue and as a result undermines the country’s efforts to wean itself off aid, as the tax collector cannot meet its targets without the taxpayers honouring their legal obligations. In the new fiscal year (2016/17), RRA targets to collect Rwf1,084.4 billion – equivalent to 55.6 per cent of the national budget –, up from Rwf980 billion collected in the last fiscal year. The anticipated improvement in domestically generated revenue would represent an important step forward in the country’s goal to be self-reliant in the near future. But, while RRA has promised to up their game in ensuring that everyone pays their fair share of tax, it should be recalled that paying taxes is a legal obligation, not a moral option. Yes, educating taxpayers and the public in general about the need to always meet their tax obligations to ensure voluntary compliance is and will continue to be a necessity. Equally, it is important that the tax collector continues to improve and modernise tax administration to bring about efficiency. For instance, no one should find it difficult to declare and pay a tax because of cumbersome collection procedures. Nonetheless, the law must be allowed to take its course in situations where taxpayers have become perpetual evaders. RRA should also adopt the practice of publicly naming and shaming tax evaders. Certainly, there are many construction and hospitality firms that honour their tax obligations accordingly. The public and country would be best served if RRA released the names of those that have made tax evasion a habit, not just in the two aforementioned sectors but across the board, especially in the corporate world. Now is the time to act on illegal tax avoidance schemes and outright taxi evasion to stop the economic hemorrhage.
