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Discuss, with reference to relevant academic literature, how a tax system might be designed to combat avoidance and evasion - Essay Example

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Discuss, with reference to relevant academic literature, how a tax system might be designed to combat avoidance and evasion

Tax evasion and avoidance have become common and is raising concerns over the effective funding of government administrative functions. It is therefore imperative that the government develop strategies that would help it reduce the cases of tax evasion and avoidance as this is eating into the country’s financial policies. People who deliberately avoid tax by hiding their wealth and income tend to pose a great challenge to the society. In the country’s effort to adjust the economy and eliminate the balance of payment deficit, it is essential to detect and follow up tax evaders and ensuring that they pay up. The world is currently experiencing technologically-driven transformation in the way business is done. The private sector is a pioneer in technology application in daily business operation including honoring of tax obligations. It is therefore advisable that the government need to seek collaboration with the private sector to develop a workable technologically driven mechanism of curbing the tax evasion menace. One of the greatest challenges is the range of data available. The government need to formulate a legal structure that is able to capture the property and assets of various entities in the country so that it can easily close down on the tax avoiders. This may be achieved through the use of sophisticated technology to analyze the purchase of property, bank loans, individual and corporate tax returns (Koniordos, 2005). The government may also target bank accounts and the employment data with the aim of identifying asset property, mark and trace financial transactions that raises suspicion and point out those who are trying to keep their wealth and income off the sight of the authorities with the aim of evading tax. Incorporation of technology in implementing tax policies also means that resources will be freed and skilled manpower from the private sector will enhance chances of rounding up tax evaders. Past records indicate that by 2010 review of the UK government’s spending, over ? 900 million to attempt to solve the problem of tax avoidance, evasion, economic fraud through increasing the size of the human capital base on this issue, invest in more skills, increase the use of data from a third party and consistently develop mechanism of tackling the slippery tax evaders and the hidden wealth. By 2012, the government stepped up its campaign of challenging the citizens to honor the tax obligation in the spirit of boosting economic growth for the general welfare of the society. The efforts of the government to apply various tax policies have always been ineffective and this explains why further remedial measures are needed. The governments of UK has been making many efforts to exploit the opportunities offered by the available data and modern technology to unveil the hidden wealth and income and to hasten its efforts in curbing tax evasion. One of the approaches that can yield better results is curtailing offshore banking fraud that is one of the greatest loopholes of tax evasion. The government need to access data with the aim of identifying linkages of such foreign accounts to some people. If the account holders are found out they should be compelled by the government to pay interest on top of taxes so far unpaid as a penalty. The actions that are important to recover such unpaid taxes entails co-ordination with foreign countries’ ...Show more


Tax Evasion Name Institution The current economic structure of the globe is highly influenced by the emerging trend in the political environment that keeps realigning itself. This has lead to liberalization of most economies and open trade. It is worth to note that the increasing expenditure of countries arising from the exponential population growth strains government coffers…
Author : lconroy
Discuss, with reference to relevant academic literature, how a tax system might be designed to combat avoidance and evasion
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