The Finance Act for the coming fiscal year 2024 recognizes this! Badly thought-out taxation is not beneficial.
The explanatory memorandum to Article 42 on the revision of customs duties on the import of certain dried fruits points out that the duties levied have been increased under the Finance Act for 2022 from 36% to 50%, without any corresponding increase in revenue; on the contrary, the increase in customs duties has led to a significant reduction in the quantities of imports declared at border crossing points, which has had a negative impact on revenue for the treasury, resulting in a shortfall of around 20 million dinars.
At the same time, the tax burden on whole or shelled dried fruits reached 110%, compared to 37.97% for powdered fruits, which is not in line with the proportionality between the added value of the goods and the customs tariffs (a very low tax rate for raw materials and a very high tax rate for processed products).
This situation has led to a sharp increase in imports of dried fruit in powder form, which suggests that there are misdeclarations of the nature of the goods (declared as dried fruit in powder form when in fact they are whole or shelled dried fruit).
In order to remedy this situation, Article 42 provides for a reduction in customs duties on imports of certain whole and shelled nuts from 50% to 36% (i.e. almonds, hazelnuts, coconuts and cashew nuts), while at the same time increasing customs duties on powdered nuts from 15% to 30%.
Tax evasion and fraud
In this context, reports in the French press have suggested that increases in tobacco taxes encourage smuggling, citing alarming figures on the high proportion of smuggled and counterfeit cigarettes smoked in France compared to those bought through legal channels.
In Tunisia, these figures are much higher because smuggled or counterfeit cigarettes account for the majority of cigarettes sold in the “hammassas”, or “dried fruit vendors” as they are now called, of which there are more than 300,000 throughout the country.
The link between ill-considered taxation and smuggling is widely recognized, so much so that some of our leaders in the past have resorted to reducing the prices of legally imported products in order to match the prices of illegally imported products, which are sold at lower prices because they pay virtually no duties or other taxes. A move that shows that the authorities really do not care.
Then there is the relationship between taxation and tax evasion
On this point, on the contrary, some specialists attribute the increase in tax evasion and fraud to the laxity of the public authorities in this area and advocate taxation as the most effective means of combating it, particularly against multinationals and the wealthy, who take full advantage of what is known as tax optimization in order to pay as little as possible, in other words the more or less legal loopholes in tax legislation.
In October, the EU Tax Observatory, hosted by the Paris School of Economics, published the Global Tax Evasion Report, which shows that while tax evasion is characterized by clearly illegal practices, other practices “fall into a legal grey area between tax optimization and tax evasion, such as the shifting of profits to shell companies without economic substance”.
They “allow those economic actors who have benefited most from globalization to further reduce their tax rates, thereby reducing government revenues and increasing inequality”.
For example, by frequently using shell companies to avoid income tax, the world’s billionaires have effective tax rates ranging from 0 to 0.5% of their wealth.
However, the report estimates that offshore tax evasion has been cut by a factor of three over the past decade thanks to the automatic exchange of banking information.