Connect with us

Is gov’t aware that high taxes cripple the economy?


Is gov’t aware that high taxes cripple the economy?

School children such as these are taught about the duty and obligation to pay taxes

School children such as these are taught about the duty and obligation to pay taxes

If you want to be a friend of government, how do you expect government to operate without your money?  The government’s monster- size budget must be financed by the tax revenue. If you are not comfortable with this, that’s your problem.

During our school days the education curriculum included civic education. School children were taught about their country and government, the rights and duties of a citizen as well as the responsibilities of the government towards the people. Some of us had the chance to be taught, right from primary, the duties of a good citizen. The duty and obligation to pay taxes was among them.

It seems to be the duty of government to tax everything that walks, crawls, swims and breathes. They must raise as much revenue as they can to be able to finance the ever bulging luxurious budget. Evidence is written on the walls that government is more obsessed with collecting more revenue than trimming their explosive budget that’s already running out of their hands.  This takes place at the detriment of the tax payer.

Today people cannot live on their incomes. Actually the tax burden on the average worker is currently threatening to shoot above 50% of their incomes.  If taxes eat up to 40% of the average family income, that’s more than for food, clothing and shelter combined, there is a big concern. Mainly workers are to feel the brunt of this burden because only workers create wealth.

I happen to understand the art of taxation in a mere analogy of plucking the goose as to obtain the largest possible amount of feathers, with the smallest possible amount of hissing.  This seems to the very analogy the government employs. The irony is that it exhibits the government insensitivity to the pains of the tax payer.  We can’t possibly develop our economy by over taxing it. It’s like trying to lift a bucket in which you are standing.

Usually government causes its own revenue shortages by wanting more money than it should have. At the end it becomes a victim of its own greedy ways. The size of government is naturally limited by the size of the economy around it. Attempts to make government larger than this limit causes economic trouble. If citizens are routinely reminded to live within their means, why can’t government try it first?

The 2016 Year Address to Ugandans by President Museveni was concluded with the following words:  “If we love one another, celebrate our diversity, resist divisions and stay united, we will achieve greatness. Let us all join hands and declare the year 2016 to be our year of prosperity. The year of building on the foundation we have laid to secure Uganda’s future”. That sounds like good music to our ears but cannot bring a decent meal on the table because the cost of living is rising at lunatic speed yet our miserable salaries are being taxed away.

Taxes happen to be the highest budget items on the ledger sheets of most businesses. These taxes take away some of the money otherwise used to pay wages. This will now explain why some employers can’t pay good wages. In the long run many businesses go bankrupt because they can’t afford to operate after government has taken its cut.   Some businesses flee the country to escape the high taxes while others cut their payrolls to stay within their incomes. The result is now loss of jobs which such businesses used to provide in the economy.

When more people cannot afford to live on their incomes, the poverty rate goes up. This causes an additional drain on the budgets of government social programs. Therefore each poor person can’t get enough to live on. Let’s now imagine many poor people are unable to find jobs because government overtaxed the economy. What do you expect them to do? Obviously they are likely to turn to crime to get the money they need to support their families. This results into high crime rate.

In economics it is established that over taxation and high taxes cause permanent recession and losses of jobs. This also leads to a drop in government revenue as economic production drops. In such a situation government will quickly jump onto raising tax rates to recoup the lost revenue. At this state production drops again and the revenue drops even more. Now this brings into focus the fact that high tax rates cause lower real tax revenue collection.

Government should let the door swing in both directions if they want to realize the effect. As they plan to introduce more taxes they should put into consideration the need to reduce their expenditure.



Continue Reading
You may also like...

More in Columnists

Advertisement media
Advertisement solar



To Top