I.4.13 Low literacy
and lack of tax education
In Rwanda, the rate of literacy is rather low and there is
limited tax education. For an uneducated person, it is difficult to understand
the need for payment of taxes. Taxes are treated as punishment.
Low literacy level makes it even more difficult for tax
administration to educate taxpayers about their obligations and for taxpayers
to complete the necessary forms.
Many of the options available to the tax administration to
educate taxpayers, such as brochures, booklets and information on the web
become irrelevant when a large proportion of the population is illiterate.
Some unscrupulous taxpayers exploit the general low literacy
perceptions by not maintaining any business records or accounts when in reality
many of them are fully capable or literate enough to do so. RRA needs to think
of other methods to disseminate information such as running face-to-face
seminars and workshops.
I.4.14 Poor
economic development and poverty
The bottom-line is that if taxpayers are struggling to stay
alive, paying their taxes would be the last thing on their mind! They do not
see taxes as an investment that might improve their future living standards.
I.4.15
Technological developments
The rise of e-commerce and internet communication is changing
the nature of business (for example, it can involve intangible goods such as
downloadable music) and makes it even harder for tax administrations to track
and account for transactions. The deletion, hiding or encryption of electronic
records by businesses also makes it difficult for tax administrators to uncover
and follow the audit trail.
I.4.16 Unemployment in border areas
In some cases, the unemployed are used to smuggle goods, for
example, high level of unemployment in border areas induce individuals to
smuggle goods and evade customs duties and other taxes collected at customs.
And there may be traders who involve in tax offences due to likely failures of
their business and other individuals with marginal income who are not able to
meet their expenses from their earnings. Otherwise the motive to commit tax
offences is excessive enrichment.
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