Introduction
It is should be obvious that happy taxpayers pay more tax and this results in happy tax collectors. Currently, in the corporate world, customer care is rated as an important aspect of business survival more important than the traditional factors of production. Hence, customer care for taxpayers by tax authorities is important for their very survival.
Tax authority’s compensation
Taxpayers either collect taxes for the government on an agency basis in such taxes as VAT and Excise duty or hand over part of their profits to the government in such taxes as income tax.
The government does not collect the tax directly from the taxpayer. Tax authorities offer tax collection services to the government. For the services provided, the tax authorities are compensated often with certain pre-agreed percentage commissions of the amount of tax collected.
The remuneration to the tax authorities is used to run the operations of the tax authority including paying salaries for the staff. Essentially, this means that taxpayers pay salaries for tax authority’s staff.
People’s choice
Though it is a must for every person who engages in any income-generating activity or consumes certain products to pay tax in Kenya, no law dictates that every person in the country should engage in income-generating activities or consume certain products.
Therefore, people have choices either to engage in taxable activities or consume taxable products. Hence, persons can choose not to be taxpayers and the government can do nothing about it.
This fact is very important for tax authorities and their members of staff to understand.
Tax authority’ customers
Tax authorities like many other organizations have two types of customers. The two types of customers are:
- External customers – Tax authorities are government agents who are tasked to collect tax from taxpayers. Hence, taxpayers are external customers for the tax authorities.
- Internal customers – The internal customers in the tax authorities who are members of staff.
The presence of the two types of customers effectively means that there is a need for customer care for taxpayers in tax authorities. This post is about the external customer.
Taxpayer as an external customer
There is the common adage that “Customer is King”. This is very true in tax collection. Taxpayer’s treatment by the tax authority largely determines whether the customer is “King or a servant”. Unfortunately, many tax authorities treat taxpayers as very-badly treated servants essentially worse than a modern-day slave.
Taxpayers are the “Kings” because they collect tax on an agency basis (VAT, Excise etc.) for the government without any pay and share part of their profits with the government without expecting any commensurate benefits.
The tax authorities are paid their commissions by the government from the tax revenues that they collect for the government. Consequently, the revenues received by the tax authorities are used to pay salaries and other expenses.
Staff in tax authorities should, therefore, treat taxpayers not only as contributors of tax revenues to the government but also as their employers.
Every time a taxpayer enters any tax authority’s office or communicates to the tax authority, they should be attended to with utmost respect – the boss has come. Taxpayers should never be treated as criminals because they are not.
That is why according to the Tax Procedures Act (2015), tax is a civil debt, not a criminal debt owed to the government.
How are taxpayers treated?
Many taxpayers complain that they are treated as criminals by the staff of tax authorities. There is a culture of treating taxpayers as criminals that have developed over time. Though some taxpayers engage in tax avoidance and tax evasion activities, in Kenya, one is innocent until proven guilty.
It is a very unfortunate situation, especially where tax officers blatantly break tax laws. The tax officers become criminals. Tax officers must follow the tax laws without exception. The law protects taxpayers. Though taxpayers have tax obligations, they also have tax rights.
We have previously said that taxpayers have rights that are enshrined in the domestic tax Acts (VAT Act, Income-tax Act, Excise Duty Act, East African Community Customs Act etc.), the Kenyan Constitution and in the international laws. Taxpayer’s rights must be respected at all times.
This is part of good customer care for taxpayers.
Customer care for taxpayer can be categorized into two:
- Specific customer care in which case some taxpayer is subjected to specific customer care.
- General customer care which is experienced by all taxpayers.
Indicators of lack of specific customer care
Many taxpayers complain that they are treated as criminals by the staff of tax authorities. There is a culture of treating taxpayers as criminals that have developed over time. Though some taxpayers engage in tax avoidance and tax evasion activities, in Kenya, one is innocent until proven guilty.
It is a very unfortunate situation, especially where tax officers blatantly break tax laws. The tax officers become criminals. Tax officers must follow the tax laws without exception. The law protects taxpayers. Though taxpayers have tax obligations, they also have tax rights.
We have previously said that taxpayers have rights that are enshrined in the domestic tax Acts (VAT Act, Income-tax Act, Excise Duty Act, East African Community Customs Act etc.), the Kenyan Constitution and in the international laws. Taxpayer’s rights must be respected at all times.
This is part of good customer care for taxpayers.
Customer care for taxpayer can be categorized into two:
- Specific customer care in which case some taxpayer is subjected to specific customer care.
- General customer care which is experienced by all taxpayers.
Indicators of lack of specific customer care
Many taxpayers complain of mistreatment by staff of the tax authorities. A quick survey of taxpayer’s experiences with staff of tax authority points to a very inexcusable sad situation. Probably one of the students studying tax should pick this as a study area.
The following are some of the ways that some taxpayers point as mistreatment by the tax authorities.
- Tax authorities issue agency notices to taxpayer’s banks and customers/clients without following the laid down procedures even when the taxpayer is still making scheduled tax payments. This is often done without informing the taxpayer who in most cases gets to know about the issue from their banks or customers/clients.
- The tax authority initiates data collective measures after being informed by a taxpayer and for whatever reasons the process is not completed only for the tax authority to later issue agency notices to the taxpayer’s bank and customers/clients to collect a non-existent debt.
- The tax authority instructs Immigration Departments to act on departure prohibition orders (DPOs) and prevents taxpayers from boarding aeroplanes at the airport for overseas trips with the tax authority never having issued the DPOs to the taxpayer contrary to the dictates of the Tax Procedures Act (2015).
- Refusal to lift Departure Prohibition Orders in blatant disregard of the dictates of the Tax Procedures Act (2015) while a taxpayer has presented an acceptable tax debt payment proposal to the tax authority.
There are many other ways that taxpayers are mistreated by staff of tax authorities all over the world. However, this should not be happening.
Though there are provisions in the various tax laws that protect tax authorities and tax officers, it is not a good enough reason to mistreat taxpayer. Taxpayers will soon go to court for Constitutional interpretations of some of those provisions that protect tax authorities and tax officers in Kenya (my prediction).
Indicators of lack of general customer care
There are numerous indicators of poor general customer care in tax authorities. The following are some indicators.
- Non-availability of some of the services provided by the tax authority such as access to electronic filing systems (e.g. i-Tax) when needed by the taxpayers.
- Slow response to taxpayers queries which may result in late payment penalties and interest.
- Taxpayers having to deal with several offices before a tax issue is conclusively addressed.
- Impersonal services by staff of the tax authority giving the impression that the worth of taxpayers is only to pay tax.
- Unqualified tax officers who lack the necessary skills and knowledge of the very dynamic tax industry and especially interpersonal skills.
- Provision of inadequate information in the tax authority’s websites.
- Harassment of taxpayers by staff of the tax authority.
- This list is not exhaustive. There are very many other indicators.
How to improve customer care for taxpayers
Many farmers across the world have realized that a happy cow is a happy farmer. That is why cows are zero-grazed, they sleep on mattresses and they are even entertained with soft music to produce more milk … and … the farmer is happy. If cows are treated like this, why are taxpayers not treated well? Should the tax authorities not learn from the farmers who are also taxpayers?
If tax authorities want to increase the amount of taxes that they collect, it is the high time they start treating taxpayers well. There have to be drastic changes in the way taxpayers are treated. The following are some of the changes that the tax authorities can make to increase customer care services to taxpayers:
- Tax authorities should adhere to the provisions of the tax laws, the country’s constitution and any international laws that protect taxpayers.
- Tax authorities should appreciate that though taxpayers have tax obligations, they also have rights that should be respected.
- There is a need for continued education of tax authorities’ staff to familiarize them with the latest changes in the tax laws.
- Every tax authority staff should be educated on who the taxpayer is, the fact that the taxpayer is a principal in tax matters occupying the same position as the government and also the fact that tax authorities are not principals but agents of one of the principals in the tax relationship that is the government.
- Since tax authorities are agents of the government, there should be legislation on the penalties payable by the tax authorities in cases where they do not follow the law resulting in losses to the taxpayer. For example in case the tax authority fails to inform of the existence of a DPO and the taxpayers is stopped at the airport, the tax authority should refund the air ticket and pay any other associated damages to the taxpayer.
- Tax authorities should realize that though the tax laws dictate that taxpayers collect tax on an agency basis and pay part of their profits to the government, no law dictates that any person must engage in activities that result in one being a taxpayer. Taxpayers are persons who have chosen to be such.
- Tax authorities should also realize that taxpayers have choices for example a taxpayer can choose not to be taxpayers and simply close their business.
- Staff of the tax authorities should be trained on the provision of internal and external customer care services.
Conclusions
From this post, we can conclude the following:
- Tax authorities collect taxes on behalf of the government which in most cases are elected government by the people to represent the people interest. The taxes collected do not belong to the government but to the people who are also taxpayers. Consequently, tax authorities are agents of the very taxpayers that they mistreat.
- Poor taxpayer services are indicators of trouble in the tax authorities. Poor internal customer care results in mistreatment of the taxpayer. This is a symptom of what is wrong in the tax authority. Therefore, the tax authorities should sort out their internal problems.
- Survival of tax authorities depends on satisfied taxpayers. It is estimated that the world over in the corporate world, one (1) out of eight (8) companies that fail, it is due to poor customer care services. Equally, if all the taxpayers decided to close shop, tax authorities would not exist.
- Tax authorities have annual targets. When taxpayers comply with tax laws they pay their fair share of taxes and the tax authorities meet their targets. Treating taxpayers well will assist the tax authorities in meeting their annual targets.
- Tax authorities are partners with the taxpayers in the development agenda of any country.
- A customer care desk, hotline or social media presence is not enough; customer care must be extended through the lifetime of a taxpayer.
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