‘Many happy returns,’ the taxman said

 The soothsayer who warned Julius Caesar to beware of the Ides of March was clearly Jordanian, and she was obviously thinking that March is the month when we dig deep in our pockets to pay our children’s school fees and prepare our tax returns for the April deadline.

Tax collection in Jordan has become the government’s top priority, judging by the number of transactions that cannot be completed unless the applicant shows a certificate from the Income and Sales Tax Department (ISTD) that his taxes are paid.

This is normal in a welfare state that provides badly needed services to its citizens, at least a third of whom living below the poverty line.

These services need to be paid for, but why is the population that provides value added to the economy and pays taxes such a thin sliver of the total?

Also, why do Jordanians evade taxes?

Research on these questions points to three public perceptions: that the rich and powerful use their official and/or tribal influence to pay no taxes, which is not unique to Jordan; taxpayers are overtaxed to compensate for the taxes the government is unable to collect from the rich and powerful, which is a Jordanian idiosyncrasy; it is not clear where the tax money goes.

The government’s approach of “won’t play unless you pay up and shut up” reinforces these perceptions.

To punish someone who is convicted of tax evasion would be laudable. The problem lies in the perceptions of widespread impunity and that the few who obey the law are treated as guilty, especially if proven innocent.

These perceptions are as dangerous as they are widespread.

There is a serious need to change the culture on both sides: people need to stop seeing tax evasion as “shatarah” (cleverness), and tax collectors need to change their outlook that wealth (other than their personal wealth) is proof of dishonesty and should be punished.

The government also needs to show in deeds, not only in words, that the law applies equally to all.

We may benefit from the experience of countries that have tackled these problems successfully.

Everywhere in the world people hate taxes, but experience shows that they cooperate in paying them when they perceive that taxes are collected equitably and result in better public services.

One approach used is to combine the carrot with the stick, for instance, by giving good citizenship awards and incentives to good tax payers.

Another widely used measure requires all officials to publish evidence on the Internet that they have paid their taxes in full.

This reminds me of a workshop here in Amman on tax evasion, in which it was suggested that officials, both great and small, should set a good example by displaying posters at the entrance of their offices showing them at the ISTD paying their taxes.

The suggestion was rejected outright, of course. And yet, one needs to demonstrate virtue before preaching it to others.