Tax Evasion in Fiscal Paradises

AuthorViorel Roş
PositionProfessor Ph. D. „Nicolae Titulescu”, University, Bucharest
Pages265-275

Page 265

The unbearable burden of taxation

Romania holds eminent places, if not absolute records, with regard to the number of duties and taxes, fiscal and parafiscal: almost 500, as well as to the number of hours a taxpayer – economic agent – must spend paying them: 200. We are the country where the name of a duty established in the 17th century, „năpasta” (offence), has today the meaning of serious injustice. We are the country that made the English Consul in the Romanian Principalities, sir Wilkinson, write almost 200 years ago: "there is no person in this world more oppressed by despotism and overwhelmed by duties as the Romanian peasant in Walachia and Moldavia and no one could suffer with the same patience and resignation as he does, even half of the duties burdening him”1. The country that seems to have turned back in time with 200 years. The country lead by men incapable of studying and following a successful model, the one of Portugal for example, of simplifying the tax system and reducing the number of duties and taxes due to the tax system, so as to reduce bureaucracy, the costs for tax collection and the time lost with its payment. The country lead by political men incapable of offering to the population and to the economic agents a tax system that observes the elementary rules of taxation. The country where Adam Smith's work "The Wealth of Nations" was translation in vain, as well as many other works that should not be missing from the desk of those who hold the power of decision, in our name, in relation to the number and size of the taxes we must pay.

These men and women should be told that, during the same time as Wilkinson, one of this fellow country-men write about the situation in his country in somewhat similar terms: "We pay taxes upon every article that which enters into the mouth, or covers the back, or is placed under the foot; taxes upon every thing which it is pleasant to see, hear, feel, smell, or taste; taxes upon warmth, light, and locomotion; taxes on every thing on earth, and the waters under the earth; on every thing that comes from abroad, or is grown at home; taxes on the raw material; taxes on every fresh value that is added to it by the industry of man; taxes on the sauce which pampers man's appetite, and the drug that restores him to health; on the ermine which decorates the judge, and the rope which hangs the criminal; on the poor man's salt, and the rich man's spice; on the brass nails of the coffin, and the ribbons of the bride; – at bed or board, couchant or levant, we must pay. The schoolboy whips his taxed top; the beardless youth manages his taxed horse, with aPage 266 taxed bridle, on a taxed road! And the dying Englishman, pouring his medicine, which has paid seven percent into a spoon that has paid fifteen per cent, flings himself back upon his chintz-bed, which has paid twenty-two per cent, makes his will on an eight-pound stamp, and expires in the arms of an apothecary, who has paid a license of a hundred pounds for the privilege of putting him to death.”2 But where is Great Britain today?

The average contemporary European works half the week to acquire the resources necessary to satisfy his/her individual needs and the other half to pay the duties, taxes and other mandatory obligations. But for the over the average European, the mandatory tax bites exceed this half, which made a famous cyclist, the French Bernanrd Hinault, declare that "when I pedal four times, three times I do it for the state and once for myself”3. The difference between us and the other Europeans is that their half cannot be compared to our half.

Our living in common, which leads to the general needs and public expenses (continuously increased by an infernal bureaucracy and by the multiplication of institutions and public employees who consume without producing anything), as well as the constitutional obligation to participate in the support of public duties, cost us dearly. But the participation in the support of these duties is nor equal, equitable or meant to encourage the person producing taxable money.

Fiscal anaphoresis is no longer possible as it was before because there are no more places for the resigned taxpayer to seek refuge in, abandoning his/her assets in order to avoid the payment of the taxes, without the possibility of ever being found. And the organized resistance in against taxation, the intelligent battle with the authority exercising its taxation right in an excessive and prejudicial manner for the nation is not us (as it is, for example, in France or as it was in England ever since 1215). We seldom act individually, sometimes dissipating uselessly; other times seeking and finding solutions even in the law. One of these solutions is “tax evasion in fiscal paradises".

Tax evasion and its forms of manifestation

Tax evasion constitutes a major interest theme both for the politicians and for the public employees, especially for those who work in fiscal administration, as well as for the legislators. But in equal measure, tax evasion is a theme of interest for the tax-payers, i.e. for all those who have the (constitutional) obligation to give a (significant) part of their income to the budgets that make the functioning of the state possible.

The difference between those interested in the phenomenon of tax evasion varies in relation to the reasons for which they are studying, researching and trying to suppress it: the politicians because it is mentioned in their “job description”, because it is their duty to ensures the functioning of the state, of its institutions, but also to acquire the necessary political capital that will allow them access to the Parliament, a position from which (some only for the image) they cannot agree with the phenomenon. Those in public administration, especially those working in the state finance administration, are interested in the phenomenon of tax evasion because they are paid for it. The legislators are interested because it is a law-related matter, thus connected with their profession.

But the tax-payer? Many of those mentioned above, wanting to live off the backs of the state, forget that state lives as a result of everybody’s contribution. They especially forget that truly productive and real tax-payers are just those who produce and these are very few. It is them, the few, who really support all the expenses of the state: the duties and taxes paid by the public employees are, in fact, duties and taxes paid by the active tax-payers (inactive tax-payers meaningPage 267 those who are merely consumers, not those who provide a service by means of which they can finance themselves). And especially for them, for the active tax-payers, the fiscal obligation is part, together with the obligation of "fidelity to the country", to “protect the country” and to "exercise in good faith the constitutional rights and liberties”, of the category of the duties set by the constitutions as “fundamental obligations”. For the others, meaning for the public employees who merely consume without producing, this constitutional obligation has a meaning only to the extent that their public employee incomes are affected by the quota of duties established by the legislation in relation to them as well. But this duty seems to be enforced rather for the inactive public employers so as to create the semblance of equality among the citizens in relation to the taxes and not because the duties paid by them were real.

Strangely, it is them, the tax-payers that I have chosen to call active, that are not only the victims of some "frightening predators", i.e. of the states who, by an excess of duties, strip the taxpayers of a (significant) part of their work's revenues, but also of the repression of the same states when they avoid the payment of the taxes or when they try to reduce the fiscal burden they must bear. They are hunted mercilessly by the authorities that live off their backs, they are pointed at by the politicians in search of political capital and they are chastised by newspaper writers looking for sensational stories. And they are sometimes placed behind the walls erected with the help of their contribution and where their subsistence is also ensured by public funds, i.e. from the contributions of those who shall chose to pay their duties so as not to share their fate. But they are also victims of some, few but extremely capable, who know how to appropriate a consistent part of the state’s incomes, meaning of our contributions.

Is it a vicious circle or a freely consented prison cell?

The state has but two options: the first is to ensure, under any price, the funds necessary to fulfill its responsibilities and the second to acquire these funds keeping our lives bearable even after we have fulfilled our monetary obligation in order to ensure the means necessary for its survival. Logic excludes the first: the state cannot acquire its sources under any price because that is not the reason for the state’s being and its expenses.

But which are the tax-payers’ reasonable options?

Payment of the duties or death were the options given by Justinian. The payment of the duties or the imprisonment of the debtors would constitute acceptable options even today if prison were to exonerate the tax-payer from the payment of the tax. The voluntary payment or the enforcement of the recalcitrant fiscal debtors seems preferable even for the state. Payment or tax evasion….? Is tax evasion a reasonable option?

The word ”evasion” is used – rarely, but it is used – as a synonym for the word "to escape", whose significance is of "escaping from prison or from under a guard". Usually...

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