Why the general sales tax? [Archives:2007/1019/Opinion]
By: Dr. Saif Al-Assaly
Every government has duties and responsibilities. For instance, it's demanded to offer services involving security and defending the homeland, guaranteeing justice, offering education and health services and financing infrastructure, in addition to other necessary requirements for the life of all its citizens.
All of this dictates that it take convenient measures, the most important of which is collecting taxes issued by the people via their representatives in Parliament. In this context comes parliamentary legislation regarding the general sales tax, which was issued by presidential decree in 2001 and which the Yemeni government is endeavoring to implement at the beginning of this year.
Numerous countries' experiments have proven that this type of tax is among the most just and efficient, as well as the simplest. Therefore, most nations have implemented it, especially developing countries.
The tax is levied on the added value at each stage of production or phases of marketing. Thus, it's characterized by many advantages, the most important of which may be that it's collected at each exchange operation, so it enjoys a large amount of transparency and encourages increasing exchange with the private sector. It also protects taxpayers against extortion by associating the tax with the reality of actual bills.
Implementing this tax helps protect rights. In order for the taxable individual to regain the additional paid tax, he must present the bill indicating that he deserves such dues. To be able to do this, sales bills are issued and purchase bills kept. Via this process, he can preserve his and his partner's rights, if he has any.
It wouldn't be exaggerating to mention that the greatest beneficiary of applying this type of tax is the private sector, as it's the greatest beneficiary of the rule of law. With this achievement, the sovereignty of the law, citizens' lives, property and the rest of their rights will be protected by the force of the law rather than by social and political relations.
Under the sovereignty of the law, various contractual relations can be established and markets can be built and developed. Under such legal sovereignty, investment also is achieved and grows and corruption will be reduced or even recess.
Situations remaining as they are currently aren't in the interest of the state, the private sector or society as a whole because it leads to continued discrimination between the taxable. For example, those at the same level of taxation will pay different taxes, so merchants won't be able to get back their rights from the government. This will lead to continued smuggling, which will cause evading of customs duties and the sales tax.
The current situation also will impede reform efforts within the tax establishment because it won't need to exert efforts to improve its performance and may not work to develop its methods or train its employees.
Situations remaining as they are also will hinder the process of combating corruption. Because there are no real documents to resort to in case of dispute or grievance, it will be impossible to monitor the performance of taxation authority employees, hold them accountable or punish them.
For this reason, we still call on those in the chambers of commerce to cease resisting the law's implementation and instead come up with reasonable and useful demands because the law can't be cancelled except by another a law. We believe the current law is balanced and contains many guarantees for taxpayers, the most important of which are automatic connection, the right to object and the right to challenge, in addition to others.
We hope the brothers at the chambers of commerce will stop frightening themselves and their colleagues with groundless matters. It's incorrect that the general sales tax will include all merchants because it only applies to importers, producers and large merchants.
It's also incorrect that the law will impose surprise or unorganized travel preventions upon the taxable. They can present their self-declaration and won't be forced to pay the tax twice. The government will be committed to pay the difference of any tax.
Implementing the sales tax won't affect the income tax and any information acquired in the process of collecting the sales tax will remain confidential and not to be used to collect any other tax.
Thus, it's possible to remove any other fears and present any required guarantees by amending the law's executive bill, as well as those regarding registration, deciding goods assets, regulations for collecting the tax and mechanisms to deal with production sites.
We're ready to discuss and reconsider any failures that may occur from the law's actual implementation and evaluate the impacts resulting from it.
Source: Al-Thori newspaper