Effectiveness of Rwandan Law of Tax Administration in addressing Tax Offences

I.3. Justification of Taxation12(*)

Taxation is necessary because it is not possible or desirable to obtain all resources needed for the government programs from prices, licenses, and fees. Certain services, such as national defense and general public administration, can not easily be sold to individuals. This is because if these services are provided, the benefits are generally available to all individuals, irrespective of whether or not they pay, and one person's enjoyment of them does not diminish the benefits available to others. Similarly, it would not be socially acceptable to provide certain services, such as education and police protection only to those who are able to pay full costs because, then, only the `rich' would be able to enjoy these services.

I.4. Principles of Taxation

If the major objectives of taxation are to be achieved, taxes should conform to certain criteria. These are summarized in the following principles:

I.4.1 The principle of simplicity

This is Ability of the taxpayer to understand. The principle of simplicity is one of principles of taxation and it advocates that Tax system should be plain, simple to understand by the common taxpayers. It should not be complicated to understand how to calculate and ultimately ascertain how much to be paid. This principle of taxation is so important in that it helps in avoiding corruption as well as exploitation by the taxing Authority

I.4.2 The principle of convenience

This principle emphasizes that both time and manner in which payments are executed should be convenient to the taxpayer. An Economist by Names of Adam Smith said that `Every Tax ought to be levied at the time or in the manner in which it is most likely to be convenient for the contributor to pay'. For instance the payment of Value Added Tax and Excise duty by the consumer is very convenient because the consumer pays the Tax when he buys the commodities at the time when he has the means to buy the product. Furthermore, the manner of payment is also convenient because these Taxes are inclusive in the prices of the commodities

I.4.3 The principle of certainty

According to Adam Smith, there should be certainty in taxation because uncertainty creates favourable climate for tax evasion hence compromising with the Taxation objectives. By this principle, it means that, the tax which each individual taxpayer is bound to pay should be certain. The time, the manner of payment and the amount to be paid must be clear to the taxpayer. Thus, this requires that there should be no element of arbitrariness in a tax. It should be in relation to ascertaining as to when, what and where the tax is to be paid.

I.4.4 The principle of Equality

Taxes should be allocated among individuals fairly and reasonably. In taxation systems, the principle of equality is considered as the most important. As Adam smith put it forward `The subjects of every state ought to contribute towards the support of the government as nearly as possible in proportion to their respective abilities'. This implies that every person should pay the tax according to his ability and not the same amount. It further means that every taxpayer should not pay at the same rate; rather every taxpayer should pay the tax proportion to his income of the taxpayer blanket

* ¹² Nicholas, T., Taxation in Kenya(Principles and Practices), Nairobi, 5^th Revised Edition, 2003, P.2