Abstract
In promoting tax compliance, policymakers must build citizens' trust int eh state and promote the idea that taxes are not punitive but essential obligations of citizenship. To achieve this, Ukrainian policymakers should focus on the following key recommendations:
--Build Trust: To increase taxes, the state should obtain an appropriate level of trust on the part of citizens who expect to receive security and services in return for taxes paid and who expect to be treated fairly by the government. Transparency and effective use of taxpayers' funds are critical.
--Educate taxpayers to enhance public trust. The government should explain to citizens the tax rules to raise awareness in taxpayers of the different aspects of tax, their rights, the ways of paying taxes as well as how their taxes are spent and affect the welfare state. Education should be implemented at an early stage (through teaching in schools) to bring a long-term shift in attitudes, and separately taxpayer education that should be a strategy priority for the tax authorities.
--Explain government decisions. Taxpayers should be informed about the latest legislative changes through official channels of communication and outreach campaigns. Official explanations should be written in simple language.
--Advocate the need to pay taxes and fees. Paying taxes is an obligation. For tax culture to be high, the state is required to use moral suasion (for example through media) and detailed explanations of how paying taxes affects the achievement of common goals, such as victory in the war.
--Enforce tax rules reliably and predictability, even in wartime. A reliable and predictable tax system is more important for attracting investors and for focusing businesses on the longer term than the tax rate. The credibility of the tax system depends on a stable, unified tax policy.
--Enhance oversight. Tax administration audits should continue in wartime. And, an external watchdog - such as the Accounts Chamber - should have more influence and authority over the audit of tax expenditures, the results of which should be available for the public and be publicly discussed, to provide for a more effective administration and for gaining citizen trust. Parliamentary oversight also should be maintained, particularly at the committee level.
--Build Trust: To increase taxes, the state should obtain an appropriate level of trust on the part of citizens who expect to receive security and services in return for taxes paid and who expect to be treated fairly by the government. Transparency and effective use of taxpayers' funds are critical.
--Educate taxpayers to enhance public trust. The government should explain to citizens the tax rules to raise awareness in taxpayers of the different aspects of tax, their rights, the ways of paying taxes as well as how their taxes are spent and affect the welfare state. Education should be implemented at an early stage (through teaching in schools) to bring a long-term shift in attitudes, and separately taxpayer education that should be a strategy priority for the tax authorities.
--Explain government decisions. Taxpayers should be informed about the latest legislative changes through official channels of communication and outreach campaigns. Official explanations should be written in simple language.
--Advocate the need to pay taxes and fees. Paying taxes is an obligation. For tax culture to be high, the state is required to use moral suasion (for example through media) and detailed explanations of how paying taxes affects the achievement of common goals, such as victory in the war.
--Enforce tax rules reliably and predictability, even in wartime. A reliable and predictable tax system is more important for attracting investors and for focusing businesses on the longer term than the tax rate. The credibility of the tax system depends on a stable, unified tax policy.
--Enhance oversight. Tax administration audits should continue in wartime. And, an external watchdog - such as the Accounts Chamber - should have more influence and authority over the audit of tax expenditures, the results of which should be available for the public and be publicly discussed, to provide for a more effective administration and for gaining citizen trust. Parliamentary oversight also should be maintained, particularly at the committee level.
| Original language | English |
|---|---|
| Place of Publication | Kyiv, Ukraine |
| Number of pages | 66 |
| Publication status | Published - 2023 |