The Problem Traders say is… Government Depends too Much on Taxes By Amin Kef Sesay The Calabash has been listening carefully to what shop owners who closed their doors last week in protest at what they see as over-taxation have to say about NRA reducing the tax threshold for paying Goods and Services Tax from an annual turnover of Le350 million to as low as Le100 million. Small and medium scale businesses that have been captured into this redefined tax net firmly maintain that with all the other bills that they have to pay, NRA would definitely not only drastically reduce their already tiny profit margins but would even drive them out of business. Many of the disgruntled shop owners accused NRA of being insensitive to their complaint and heartless, stating that it makes good business sense for NRA to keep tax rates at a very reasonable level in order to encourage the development of the private sector and the formalization of businesses. Modest taxes, they further explained, are important to small and medium enterprises, which they said contribute to economic growth and employment but do not add significantly to tax revenue. Imposing high taxes on micro, small and medium size enterprises which make up more than 90 percent of taxpayers but only contribute between 20 percent and 25 percent of tax revenue, tax experts uphold, impose high tax costs on businesses of this size; causing such businesses to move to the informal sector or even worse cease operations. Whilst the shop owners we spoke to maintained that they are not against paying taxes, agreeing that Government needs tax revenue to provide the goods and services its citizens need, they stated that one way of encouraging compliance is to keep rules as clear and simple as possible. Overly complicated tax systems, they said, are associated with larger informal sectors, more corruption and less investment. They said that it also contributes to discouraging consumption expenditure, as it forces them to increase prices, which they said brings down their turnover. On the other hand, the shop keepers we spoke to argued that economies with simple, well designed, well defined tax systems are able to boost business activity and ultimately investment and employment. Thus, while they stated that the ECR machines are complicated and time consuming to use, they humbly appealed to NRA to consider maintaining the GST threshold at its former level in order to encourage the entry of more small and medium size businesses into the formal sector.