A lesson in duty collection

Thursday, 4 November 2010 02:20 - - {{hitsCtrl.values.hits}}

THE Auditor General’s report on vehicle registration has revealed startling levels of corruption with the government reported to be losing as much as Rs.7 billion due to fraudulent entries and disregarded tax payments.Newspaper reports carried banner headlines of how the government is being deprived of a significant income, which is the entire point of having high taxes on vehicle imports.

It is disheartening to note that not only was the industry virtually at a stranglehold due to the high vehicle import duties, the people not have the chance to upgrade their standard of life but that the taxes which should ostensibly be used for development was being siphoned off due to corruption. This was clearly a “lose-all” situation for everyone concerned.

Sadly the government itself is at fault for looking for quick-fix solutions to their income woes by tagging as much as 300% in taxes to vehicles, often the smaller cars bought by average income holders came in for a high tax percentage. The people with little recourse turn to bribery and corruption to save some of their hard earned cash resulting in massive losses to the government. According to reports as many as 5, 000 vehicles have been fraudulently registered with old licence plates issued to new vehicles.

Jeeps and other vehicles have been registered under motorcycle numbers and engines with high CC rates have been substituted with lower capacity so that the taxes are reduced. It is clear from the Auditor General’s findings that this corruption is well organised and of long standing. Even with vehicle taxes being significantly slashed a few months ago the corruption continued unabated and despite the final findings being handed over to the relevant officials it is hard to believe in a wiping out of this corruption.

The computer system was fingered as being the main culprit as it could be accessed and altered at the will of a large number of people. While the processors clearly need to be revamped it must be remembered that this should be done without creating more inconvenience to the public. The more red tape that is introduced the more people will be inclined to look for short cuts. This entirely defeats the purpose of streaming the registration process so that more people will be encouraged to pay their legal dues.

Combining efficient processors with responsible and law abiding citizens is a good governance challenge that has been facing successive governments. While it is hard to believe that change will happen fast it has to happen nonetheless and the officials should analyse the Auditor General’s report and implement a practical structure as soon as possible.

On the other hand people must also perform their duty by paying taxes. Since the government has reduced the amounts the people can also change their stance at least to some extent and make payments, especially if the process is made easier. High vehicle imports is one way to measure development but that can be of little sustainable value if the owners as well as the government do not work together for mutual benefit.

In the pending Budget, expectations are high for a sweeping tax reform. Therefore it is all the more pertinent for the government to find practical and loophole free tax payment methods so that the money can be utilised to serve everyone.