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Tuesday 15 June 2021
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Tunisia-taxation: an endless inventory

The biggest headache that is currently agitating the government is the draft Finance Act 2018. Certainly, it is a routine exercise, but this time it takes paces that it would not be outrageous to call very serious.

Tax revenues are scarce and destitute and expenses are exponential. Arbitrating them stands as a balancing exercise.

The growing gap in public finances adds to the tragedy of the question, while demands arise from wage increases, from employment and development, or from needs expressed under the form of protest which the State has little means of defusing except in capitulating.

However, according to many experts and even organizations, including the UGTT, money exists, and the State has only to look for it among those who are reluctant to pay their due taxes, but also and above all to this fraudsters who profess to be tax evaders and who operate openly and in full view of everyone, not to mention, of course, this category of Poujadist corporations which, in each Finance Act, make a big noise to escape from this highly civic duty of paying taxes as equal to every taxable person.

In addition, these shortfalls would be sufficient to replenish the state budget, dispense with debts at home and elsewhere, finance job-creating projects, mitigate regional inequalities as much as possible, and curb the recurring social anger and unrest.

Billions of dinars are thus in nature. They are either hoarded or spent for speculative and other purposes such as the excessive investment in real estate, besides injecting into parallel trade and smuggling, undermining more than half of the country’s economy and depriving the coffers of State from huge subsidies that would have been used for healthy financing profitable to the community.

Instead, the government sees itself colossal resources slipping through its fingers, resources to which it is strictly entitled but that it is incapable of recovering, although the authority with which it is invested allows it in all possible forms.

The art of squandering money and not getting it back!

Let us pass on the political impediments and their derivatives which take the State hostage by means of camarillas, parties, political dispensaries and others, which paralyze a government supposedly of national unity but that is desperately left alone, even stigmatized and pushed towards the exit.

The fact is, however, that Tunisia’s tax system plays a major role in this mish-mash, which has become increasingly acute since 2011 as a result of the inevitability of the teams that have succeeded to power with devastating damage on which it is useless to return.

This, despite the fact that one of the priorities to which it was comminatory to address was taxation, the sinews of war in all states.

They had begun to spend the money available on the right and left, without forbidding themselves to squander the mattress left behind by the past regime, or seek to create wealth, at least by means of the inherited mechanisms.

However, the country had 685,000 taxpayers, of which 410,000 (80%) were covered by the flat-rate scheme and contributed only 0.2% to the overall value of tax revenues.

For the State, of which 65% of the budget resources, equivalent to 20 billion dinars, come from tax revenues, the fight against tax evasion is more than an absolute necessity.

Hence the urgent need to launch reforms and mobilize resources for the state budget.

The point is to recover 5 billion dinars which constitute the amounts of unpaid taxes. To date, these funds, and no doubt more, have remained where they were and are stored.

To this is added the fact that only 33% of taxpayers voluntarily declare their annual income. In the best case scenario, this rate reaches 50%, thanks to the intervention of the control services of this branch, knowing that before the revolution more than half of the taxpayers reported their taxes (58.7% in 2010).

A rethinking more than a reform

There has been no response to calls for reform of the tax system. Those of the International Monetary Fund and the World Bank to the end.

The IMF, in particular, has been bent on recommending an “urgent” reform of the tax system, including the flat-rate system.

“This regime, supposed to subject micro-companies to a low flat tax, seems to have been the subject of serious abuse with 98% of the taxpayers hiding behind,” notes the World Bank in its famous report “the Unfinished Revolution “.

In fact, there should not be a question of reform, but rather a rethinking of taxation in the country, which has become almost obsolete and ineffective, favoring abuses and non-compliance with tax rules.

This tax system is moreover all the more complicated, illegible and catch-all that it would look like two drops of water to an endless inventory.

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