16 January 2013

Gambia: VAT and Prices


Taxation plays an important role in the development of a country, for which The Gambia is no exemption. This is because the country is a tax-based economy and solely depends on domestic revenue mobilisation to meet its current and future development needs. However, this makes taxation a critical catalyst in supporting government towards servicing its development needs and aspirations in the areas of revenue collection, financing government services in terms of salaries, provision of quality health service delivery system and infrastructural undertakings.

Thus, tax is primarily an obligatory contribution for citizens and non-citizens alike to pay to government their fair share of taxes based on an individual's taxable capacity of the set tax brackets (rates). The desire for greater autonomy, partnership and participation of every taxpayer as partners in development in the tax system to better optimize revenue collection heralds the establishment of tax administrations.

Taxes do not give direct benefits to individuals but rather on a collective scale in terms of roads, hospitals, markets, schools etc. taxation have wider direct bearings on people and communities. From the foregoing, this makes taxationa critical and fundamental component in the development strategy of a country. Consequently, taxation and tax payment is primarily a compulsory contribution to governments by taxpayers without a reservation to a particular benefit to be received by the taxpayer directly. Therefore, the services that we receive in return such as schools, roads, hospitals, security etc, are derived from the taxes we pay.

Taxation and development are closely intertwined due to their complementary nature and relationship in playingfundamental roles towards national development. An emerging trend in the developing economies has identified taxation as a catalyst in facilitating development and in improving the socio-economic well-beings of its citizenry for which The Gambia is no exemption.

In the developing and emerging countries, the importance of taxation in its development course cannot be under-estimated considering its impact to national economies and governments -as a potential revenue support base of fuelling development strides. Taxation therefore is the 'engine of growth' for national economies and governments. It serves as a conduit to re-engineer, augment, enhance and support the productivity efforts of governments to service their development programs/agendas and in meeting the people needs and expectations.

In view of the above, Gambians and non-Gambians alike should realise that the payment of our taxes is a national duty. All and sundry must therefore make it a point of duty not to default in its payments. Those in default should endeavour to settle their arrears in due course. It is by so doing that we can collectively accomplish the development aspirations of our country.

However, the recently introduced value added tax (VAT) should not lead to the skyrocketing of the prices of goods and services. This is simply because VAT has come to replace the sales Tax. It has not in any major way altered our tax structure, hence cannot necessitate price increment. The business community must know that business is basically a fundamental human activity that people engage in to earn their living.

It is also a vital means of promoting the economic wellbeing of a nation. Therefore, it is important that those who are engaged in this crucial activity do it with honesty and empathy. Hiding behind the VAT to increase prices of goods with a view to exploiting the common person violates the principles of fair trade.

Besides, business can simply grow when prices of basic necessities are reasonable. A slow but progressive business is what is sustainable. We hope the business community will heed this advice and embrace the culture of honesty and not use the tax regime as a basis for exploitation.

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