Unlike previous years, having basic tax literacy is increasingly becoming an important requirement in contemporary times.
Gone are the days when tax knowledge was a preserve of the taxman at the top-most level and professionals in the accounting and financial disciplines.
Cognizant of this trend, tax administrations across the world have been employing various mechanisms to enhance tax literacy among citizens. In Nigeria, for instance, the Federal Inland Revenue Service (FIRS) has gone creative and leveraged the country’s immense film production and consumption potential to produce tax-themed soaps as a tax education tool.
According to various scholarly findings, tax literacy levels are directly proportional to compliance levels. The lower the tax literacy levels, the lower the rate of tax compliance, and vice-versa. This explains the great determination and emphasis by the modern taxman to educate the populace within their jurisdictions on tax matters.
In as much as this is a step in the right direction, enhancing tax literacy should not entirely be the responsibility of tax administrations, but rather a collective responsibility by all stakeholders. For example, we are currently in the tax returns filing season for 2020. In addition to deducting Pay as You Earn (PAYE) and processing P9 forms, employers should proactively take up the responsibility of imparting basic tax knowledge on returns filing to their employees. Employers should not only issue P9 forms on time, but also ensure employees file their tax returns early to avoid last-minute rush. This can be communicated using internal circulars, emails or any other appropriate internal communication tool.
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Late filing and failure to file tax returns altogether attracts penalties as stipulated in the Tax Procedures Act (2015). It would therefore be very unfortunate for a taxpayer to suffer a penalty for failure to honour an obligation as simple as filing a tax return.
As the Kenyan government continues to roll out the Competency-Based Curriculum, it would be paramount to consider incorporating basic tax education in the curriculum as well for the young school-going Kenyans. Time is ripe for us to prepare future taxpayers as early as now for sustained efforts towards inculcating a culture of an above-average tax compliant society.
[Faustin Mwinzi, lecturer at KCA University]
