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TAX NEWS - 2010

Tax Paying Is Essential for a Nation's Economy

Failure to pay the tax on road transport, also known as the circulation tax or number plate tax.. The immediate and naïve reaction of a close friend, who is a great and disciplined professional, was to confess that it was the first time he learned about the procedure to pay such a tax, as he believed that he was doing so while paying the car insurance.

He had been ten years without paying the road tax, and the unbelievable part of this story is not that he did not pay, but that throughout these years neither the tax institution nor the police had ordered him to pay for his clear violation of the law.

Not being aware of a law does not exonerate an individual from his or her responsibility, but this is a classic example of the lack of demand and discipline we are experiencing, of the weakness of the current tax system, and a vivid instance which shows that when we refer to institutionalization, it entails not only that all institutions work following the established rules, but also that they prevent the impunity in the fulfilment of the legal obligations of all citizens, since it would generate anarchy in any society.

Now my friend will have to pay a large amount of money for the debt and the penalty charges, and pass through the torturing bureaucracy of the tax office. Somewhere else, he would have had to pay more for these arrears of tax paying.

When reading the news and commentaries about what happens in other countries, we can realize that situations like those regarding the non-payment of taxes do not just takes place in Cuba, since we don't know anything— so far— about taxes, which are, however, essential aspects for many other nations due to the economic funding these incomes represent.

In other countries, the tax regime is designed to avoid these arrears or evasion phenomena trying to simplify the system, that is, making the procedures simpler and easier to understand, and at the same time create the specialized organisms and inspectors on this task, and make these legalizations indispensable to act energetically.

There are many nations which have tax collectors who carry out preventive work since they warn the citizen of the tax offence from the very first moment, sending at least a notice when the person has not paid on time some of the taxes set, even more at present, when there are ways of automatic control.

The regulations against the arrears in most countries are really strong and force the taxpayer to pay a penalty per each month of tax paying arrears; 10 % of the total tax in some places. If it exceeds 200% of the tax or withholding, the issue is considered very serious and is worked out by the legal system.

The fact is that without the tax collection those states could not work properly, they would not have funds to finance the public health services, education, defence, the systems of social protection (unemployment, assistance for disability or work accidents), or for terrifying things like financing a war.

According to the principles established by the US government, for example, the taxpayers who stop paying are a serious menace to the US economy.

Consequently, tax evasion is illicit and is commonly contemplated as a crime or administrative offence which can cause the non-payer to be imprisoned or to pay a huge fine.

For the US Internal Revenue Service (IRS), these actions "undermine the public trust" and thus, in the United States law allows the court to levy a fine of up to USD 25,000 when the taxpayer is responsible for the arrears in payment or did not pay for any reason.

The IRS can also instigate major processes and sentence the individuals to prison for violating the tax laws.

The facts prove that whether we have a high political position, or are famous in any scenario, or build a company with many branches, if we violate the taxes the system acts implacably, or else, it would be permanently in crisis.

A much-talked-about case took place in 1973, during the Nixon administration, when the vice president Spiro Agnew, was accused of tax evasion and accepting money from private contractors. He was dismissed from office and further replaced for Gerald Ford, who was president of the United States afterwards.

There are many other examples:

Randall Cunningham, an ex Republican congress man for California, was condemned to eight years of imprisonment for fraud and to pay 1.8 million dollars for evading taxes. Cunningham was a war pilot in Viet Nam whose acts inspired the film Top Gun.

Martha Stewart is a successful business woman who built a vast fortune thanks to magazines and TV programs. A New York judge condemned her to five months of imprisonment for the accusation of lying regarding a share transaction with the intention of evading taxes.

Richard Hatch was the first Reality Show winner of the Survivor US television. Over fifty million viewers saw him triumph over the 15 opponents in the contests which took palace on a far-away island. He was accused by the legal authorities of not declaring the million dollars prize he won in that program. He had not paid for his labour incomes either. He was condemned to five years imprisonment and to pay a fine of 250,000 dollars per each charge for legal evasion.

The principle of such strict demand for tax paying is that the state, apart from what they may do with the taxpayer's money, would collapse in its public policies if the tax decisions depended on each person's will, of if someone spent ten years without paying any, as my friend did.
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