Tax avoidance may seem attractive to high-earners, but tax evasion is a problem for all. Imagine, for one moment, an individual earning millions of US dollars. That same individual may understate income to deceive and defraud officials, with the aim of paying less tax; also known as, tax evasion. There needs to be a system to deal with these issues. This paper argues that an electronic payment system, which records all card and cash transactions, can help officials with evidence of income through expenditure-tracking and, eventually, a better tax collection system.
First of all, what is an electronic payment system and what does it look like? It is simply a system that utilizes cards and electronic devices to store and record all transactions. A person will be issued a card, kind of like a debit/credit card. The card will be scanned through a device with the amount of any transaction. This device will be shared with government officials, making for a better understanding of income earned for tax purposes.
Secondly, what are the benefits of the system? Electronic payments increase transparency and allow for less fraud and evasion to occur. This system also allows for cash payments to be traced, making them more useful for the stated purposes than credit or debit cards. Overall, it is the perfect system. Almost, there are, however, pitfalls of the system to address as well.
Naysayers of increased transparency will point to corresponding decreases in privacy and freedom. If people cannot buy anything without the government knowing, then what else is there? This is a fair concern. Having said that, it is a citizen’s duty to pay tax once they earn a taxable amount. Tax avoidance measures are still legal, but tax evasion is criminal, detrimentally affective to those in need and just wrong.
In conclusion, electronic payment systems can aid in tax-collection efforts. They are systems designed to record all transactions an individual makes. They aid in greater transparency efforts. Finally, they may be anti-privacy but they are also essential without being too intrusive. With the absence of a better system, governments should steamroll this immediately and enjoy heightened tax reserves.