Debate continues – tax avoidance & tax evasion

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Mr Jallow, you have raised very interesting points in your reply to my rejoinder. It appears to
me that we have both agreed on the point that tax avoidance is legal but tax evasion is
illegal. The point I was trying to make in my previous article was that the two are used
interchangeably although one is legal and the other is not, and causes a lot of confusion for
many people.

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    You concur with me that morality is subjective and went further to state that, that is why we
    have laws surrounding taxation and pretty much everything else. I could not agree more
    with you. I do not think that people avoiding tax is the problem, the problem is short
    comings in the promulgation of laws and poor design of tax regimes.

    I mentioned in my previous article that in the Gambian context, there is a need to review
    our tax systems ranging from dividend, withholding, payroll CGT etc to make them fairer.
    This will ensure that the tax system is not open to abuse and vengeful towards the poor and
    the powerless. We are where we are Mr Jallow because of governments’ inability to keep
    their promises and look after those at the bottom of the income ladder. Mr Clinton, when he
    was president in 1998 caused a storm when he said, “Save our Social Security”. This was well
    received across America because he knew that was what people wanted to hear. This
    however triggered a reaction from senator Ernest Holdings when he said, “Obviously, the
    first way to save Social Security is to stop looting it”, (Rich Dad’s Cashflow Quadrant, P 65).

    It is quite obvious from the above that the federal government has been responsible for
    borrowing the retirement money for expenditures. I think Mr Jallow what we need to
    understand is that the reason why the rich do not pay a lot of tax is because they do not
    earn their money as employees. I demonstrated this in my previous article where my friend
    could save £10,600 if he pays himself an annual dividend of £45,000 rather than earning it
    as a salary.

    I agree with you again when you stated in your response to my rejoinder that “To avoid tax
    is to not pay tax law-makers intended you to pay”. Again, tax avoidance is still legal within
    the framework as the law-makers have not done their work well enough to close those
    loopholes. Stopping at intent alone will not make the practice illegal. They need to put in
    place stringent measure to make it difficult or even impossible for people to take advantage
    of those gaps in the tax codes.

    As an accountant, I am employed by a company that needs me to highlight any potential
    lawful money saving opportunity within my remit and to ensure that those opportunities
    are exploited. Some people may say that is immoral but I am doing a job and something
    being moral or immoral is debatable. However, what we need is a concerted effort to
    influence policy and work with legislators to bring in laws that will ensure that everyone is
    paying their fair share of taxes.

    I am with you when you said and I quote, “Tax avoidance – particularly in an era of cuts and
    austerity – is indefensible”. This to me is true as I fall in the category of the poor and I moan
    about it because I am not privileged to earn my income in any other way other than a salary.
    However, nobody will go to prison because they minimised their tax liability which was the
    gist of my previous article. Robert Kiyosaki, the author of Rich Dad Poor Dad once
    responded to a question about how much he earned in a particular year. He said to the
    newspaper reporter that he earned $1m dollars but paid no tax. This income was earned
    from capital gains and he used what is called Rollover Relieve to not pay tax and indefinitely
    defer it.

    To those who cannot use the system to avoid tax, this is immoral but to the benefactor, this
    is called being smart. This is the reason why I say that we as citizens need to put more
    pressure on our governments to bring about tax reforms that will curtail the use of
    questionable schemes and put a stop to system abuse.

    I will end the debate now because I believe you and I are on the same page but just that we
    see the same issue from different angles.

    It is indeed a pleasure that I am able to engage you on this topic and get your reaction in a
    very professional manner. I think others will learn lessons from this discourse and engage
    each other maturely, if the stories I heard about what goes on in Facebook are anything to
    go by. I am not on Facebook but I heard a lot of unpleasant things about it.

    We as Gambians should learn to respect each other and understand that people will always
    have differing viewpoints with you but that does not give you the licence chin them.

    Thanks for a very constructive and fruitful debate Mr Jallow. I have learnt a lot from your
    writings and I will encourage you to continue sharing your knowledge as you are an
    inspiration in my view.

    Nuha Ceesay
    Leeds
    United Kingdom

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