Tax Reform or More Amnesties | Reforma tributaria o más perdonazos

By Miguel Ángel Roca, Red Uno:

Dunn: the tax amnesty is not enough, Bolivia needs a structural tax reform

Jaime Dunn believes that Bolivia needs a tax reform that not only focuses on forgiving debts, but on eliminating the mechanisms and the system that generate them.

Dunn: el perdonazo tributario no basta, Bolivia necesita una reforma estructural de impuestos

Economist Jaime Dunn stated that the five tax relief measures ordered by the Government are welcome; however, he warned that the country requires a deep tax reform that eliminates the system and mechanisms that generate recurring tax debts.

Dunn maintained that, beyond the forgiveness of fines and interest, Bolivia needs to undertake a structural change to the tax regime, considering that the complexity of the current system discourages productive activity and pushes thousands of taxpayers into informality.

According to his explanation, the reform should be implemented in two stages: a first one aimed at regularizing the State and the affected taxpayers, and a second focused on simplifying the tax system. On this point, he proposed taking as a reference other countries that apply a single-form scheme and a single rate close to 10%.

“In other countries, people devote 95% of their time to their economic activity and only 5% to paying taxes. In Bolivia, the opposite happens: 80% of the time is spent complying with tax obligations and barely 20% on working and producing, and that way we will not move forward as a country,” he warned.

The economist added that it is necessary to implement measures that facilitate tax payments and reduce conflicts between citizens and the tax administration. He warned that there is a broad universe of taxpayers with frozen accounts and current sanctions who need to be reincorporated into formal economic activity.

He also recalled that this is not the first time a tax amnesty has been applied, since this type of measure is repeated every five or ten years because the underlying problem remains the same: an increasingly complex and difficult-to-comply-with tax system.

We have to go further. It is not just about forgiving debts, but about eliminating the mechanism and the system by which those debts are produced. That is the structural reform that is still missing,” he stressed.

Finally, Dunn recommended that taxpayers adhere to the current measures and warned that the “civil death” generated by tax noncompliance is harmful not only to individuals, but also to the country’s economic activity.

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