A global poll conducted by AccaGlobal to survey if citizens agree that taxes are paid in exchange for services, has displayed shocking results. As per the details, the poll suggested that just one-third of the population sees the social contract of taxation to be a deal that works in practice.
Taxes are levied on the general public to provide public goods that everyone can utilise. Popular examples of public goods financed by taxation are toll free roads, public hospitals and public schools.
Every individual has equal access to public goods and services, and cannot be excluded from utilising them. In line with this thinking, 52 percent of poll respondents felt that taxes were a contribution to the community rather than a cost.
Poll respondents believed that public goods and services were a necessity. However, 25 percent disagreed, stating that in their opinion, taxes were a cost and not a contribution to the community.
It is to be noted that only 33 percent of poll respondents believed that tax revenues collected in their country were actually used to provide public good while 46 percent outright refute this belief.
There are two possible reasons as to why respondents believe their tax funds are not spent on them. The first of these is the level of corruption within the country. This could indicate that taxpayer funds are being misused as government officials consider said funds to be a source that can be used to illegally enrich themselves.
The second reason concerns only the elite. This is because as wealth rises, it is unlikely that an individual would be a consumer of public goods and services. An example here could be a wealthy individual choosing to seek care at a private hospital as opposed to a local public hospital.
Since both of these segments of society do not expect the funds to be spent on them, they believe that their funds never actually serve them.
Poll respondents from Latin America displayed the most amount of pessimism regarding their tax funds being allocated to services they need. This makes sense as countries like Brazil and Argentina score abysmally low on the corruption index with scores as low as 36 out of 100 – the lower the score, the more rampant corruption is in the country.
The chief executive of AccaGlobal has highlighted how public trust in taxation systems is necessary for an economy to attain prosperity. These arguments can also be applied to Pakistan as higher transparency and lower corruption levels might boost tax levels, resulting in citizens believing that their funds are truly spent on them.