Editorial

Even though the government is running a substantial deficit in its finances, a strong case is being made against any imposition of new taxes in the budget as this would make the economic situation worse than it already is. There is nothing worse for an economy than to instil into the minds of taxpayers the notion that they are working not for their own advancement, but to shore up their straitened government. It makes people resort to tax evasion and there is already enough of that in the country.

The constraint on raising money from taxation, which is already tight enough, leaves the government with the problem of finding the revenue needed to bridge the considerable deficit, and as it well knows it has no magic wand to generate new economic growth. Further privatisation might be one source, but the market may not be at present in quite the right mood for that to be sufficiently profitable to the government. Those who are in a position to feel the pulse of the economy better than others also suggest that the government should take a more determined look at other sources.

Which brings us back to tax evasion, with many in business and industry still talking about rampant tax evasion by people who are still getting through the VAT net easily. Many have been under the impression that the tax evasion problem was at last well under control or, if not under control, that the tax authorities were making strong inroads into that segment that had managed to escape the tax net.

Well, it does seem that that impression was false and that the problem is still giving the authorities cause for some concern. So much so that the finance minister himself has gone on record saying that the government was determined to step up its efforts against tax evasion. It is a familiar refrain we have heard before but it is only the salaried workforce that pays its due to the last cent.

The minister spoke of his government's determination to get to grips with the problem when in summer, with the election over and won, he made the shock announcement about the deteriorating state of the government's finances. But he did not give details of what the government intended. In all likelihood, he will do so in the budget speech next month, when the government is also expected to announce details of its proposed welfare reforms and measures to help reduce the deficit.

In the opinion of the president of the Chamber of Commerce, evasion of VAT is widespread. The chamber believes that considerable tax evasion lies with part-time tradesmen and individuals in the service sector who keep no formal set of business records or accounts and rely on word of mouth to promote their work. The majority operate in the underground economy since they are not VAT-registered.

How is the country going to step up its fight against this type of tax evasion? The consumer has a part to play in the efforts to reduce the abuse - for an abuse it is - even though this is easier said than done.

If tax evasion is still as widespread as it is being made out to be, then the government will be right in doing all it possibly can to round up the offenders. Abusers ought to be put on notice that sooner or later they will be caught, and that when they are, the state will not look kindly on them.