Tax Evasion in Cameroon: Causes and Remedies

Abstract

The Cameroon government imposes charges on citizens and corporate bodies called taxes in a bid to raise funds to pay for public services or facilities. It also uses taxation in the redistribution of wealth, and in encouraging or discouraging the consumption of some goods and services. In a circular No. 001/C/MINFI of 2 January 2018 by the Ministry of Finance of Cameroon, stringent measures were undertaken regarding the detection of “concealed” income or tax evasion, a phenomenon that stifles government efforts in realising its tax objectives. As a consequence, this study sought to investigate the causes of tax evasion in Cameroon and propose remedies. Data was collected through a survey carried out in the cities of Douala, Bafoussam and Bamenda, and analysed using the Ordinary Least Square (OLS) estimation technique. The empirical results were of positive and statistical significance and revealed that tax evasion in Cameroon is caused by high tax rates, complex and opaque tax laws, inefficient and corrupt tax inspectors, low income of taxpayers, evasion benefits outweighing detection penalties, poor perception of the judicial system and dissatisfaction with the quality and magnitude of public services and goods. Remedies proposed were that there should be a reduction and clear justification of tax rates, simplification of tax laws and effective education of taxpayers, creation of a more conducive business environment to boost business income, raise tax penalties, identify and deal with inefficient and corrupt tax authorities, liberate the judiciary to be truly independent to show proof of fairness and transparency in the treatment of tax matters and politicians being transparent and accountable for their decisions and use of public money. Tax ethics should be introduced and enforced in schools in order to build a culture of tax compliance in citizens, assiduity and honesty in tax authorities, and transparency and accountability in politicians and everyone in public offices.