A Critical Analysis of Effectiveness of Tax Offences Control Mechanisms Under Rwandan Law

I.2.6 Optimum allocation of Resources

Taxes may bring about a balanced national development. This means that out of revenues collected, government may decide to allocate resources to areas or sectors where development is highly needed so as to have balanced productive results.

I.2.7 Restriction of consumption of certain commodities

The government imposes taxes for the element of social welfare by imposing high taxes on harmful goods to human health and these include alcoholic drinks, cigarettes and other harmful chemicals.

I.2.8 Controlling Inflation

Taxes are used to check on inflation by reducing the purchasing power of the people. This can be done by increasing taxes on their incomes so that there is a reduction on disposable income^15(*).

I.2.9 Tax offence

Rwandan Tax law does not define a tax offence. However under article 106 of the Russian Tax code, a tax offence is defined a tax offence as ` an unlawful (in violation of tax legislation) act (action or inaction) of a taxpayer, tax agent or other persons entailing liability under the present Code^16(*).'

In other words, this article ensures that the act cannot be regarded as tax offence unless four elements of tax offence exist: (i) The act should be unlawful; (ii) there must be guilt in the composition of the act; (iii) the act should have been committed by one of the subjects mentioned in the article and (iv) Tax Code foresees a responsibility for such an act.

The notion of tax offence under Rwandan tax law slightly differs from the Russian definition. The academics depict `tax offence' «as an unlawful, culpable action or inaction, that results in non-fulfilment or inappropriate fulfilment of tax obligations foreseen in the tax legislation and such action or inaction breaches the rights and legal interests of participants of tax relations and legislation foresees legal responsibility for that^17(*)»

* ¹⁵ Tayebwa M Benard, Basic economics, 3rd edition (1992)

* ¹⁶ http://www.russian-tax-code.com/PartI/Section6/Chapter15.html, cited on 24/12/2008

* ¹⁷ Shaulov D.I. and Cann U.T. (2000) «Foundations of tax legislation», «World of economics and law» publishing house, 2000, Tashkent p. 71