THE GOVERNMENT’S draft bills aimed at combating tax evasion “will not lead substantially to stamping out” the “gangrene” the problem represents, and if we think that combating tax evasion will solve the country’s fiscal problems, then “we are labouring under a pitiable delusion”, KEVE President Manthos Mavromatis said yesterday.
Speaking to reporters, the Cyprus Chambers of Commerce president said that his organisation would be submitting its own proposals to Monday’s meeting of the House Finance Committee, as “radical changes to combat tax evasion require radical decisions”.
Mavromatis said that “the real issue is the bold decisions that need to be taken mainly to restrain public spending” sooner rather than later, and we should not “harbour any illusion”, because “if we think that combating tax evasion, which KEVE totally agrees with, will solve the country’s fiscal problems, then we are labouring under a pitiable delusion.”
He said that rather than aiming to extract more tax from law-abiding citizens and businesses, KEVE’s proposals are designed to modify the tax system to ensure that the maximum number of working people and businesses are assessed on more thorough and regular basis.
The aim should be to prevent the “distortion of the market” arising from the fact that some businesses pay their taxes while others compete unfairly by failing to do so.
According to statistics presented by KEVE, roughly 218,000 employees in the private and public sectors plus 72,000 self-employed submit a tax return, out of a total working population of 404,000, although some 446,000 people are registered with the Social Insurance Fund. This means that, leaving aside those who do not earn enough to pay tax, “many people who should be paying tax are evading it”.
Therefore, Mavromatis said, “the most radical proposal for combating the gangrene of tax evasion is the obligation of all adult citizens of the Republic (over the age of 20) to have a tax ID and to make an annual income declaration (including when they do not have one)”.
Secondly, all adult citizens should “submit a statement of assets every five years, in which they will declare all property or assets registered in their name and any changes that have occurred since the last statement.”
In parallel, the penalties for non-compliance or making false declarations “should be especially harsh”.
“In this way, we will be able to overcome the problem highlighted by the Auditor-general, whereby persons with large assets or who engage in large transactions do not even have a tax file”, Mavromatis said.
KEVE will be proposing that given the size of the task of putting the revised system into practice – gathering and collating data based on simplified forms, making full use of the internet – should be put out to private tender.
