The Amalgamation Policy of Palestinian Income and Added Tax Department, and its Effect on Commitment and Treasury Collection

The main objective of preparing and conducting this study is to measure the possibility of success of applying the amalgamation Strategy on one of the most important resources of the Treasury for the State of Palestine, which stands for consolidating, both, the income tax and the value-added tax. Especially that the consolidation process has started already, and it has been applied in one of the most important Tax Departments which includes the largest files of taxpayers in Palestine, which is the Department of Senior Taxpayers. To achieve the goal of the study, the work firstly is to measure the consolidation status that is occurring in this Department, and then explore the reached outcomes, whether they were positive or negative in terms of the role of this consolidation in reducing the operationalexpenditures, limiting the level of tax evasion in Palestine, and in raising the level of provided services for the Taxpayers, which is reflected on increasing and expanding the base of commitment to voluntary tax, and on increasing the collection and tax outturn received by the Treasury. Therefore, the researcher has used the Descriptive and Analytical Approach, and developing the research toola questionnaire for two communities: The First Community: all of the taxpayers in the Department of Taxpayers in the West Bank, except for the files of the financial institutions subsidiary to the sector of banks, and sector of insurance, This community consists of (304) taxpayers as per the statistics of the Palestinian Unified Revenues Management System (RMS), conducted in June, 2014. An amount of (169) taxpayers, (55.5%) were selected as a random sample from this community. The Second Community: all of the staff working in the departments of income tax and value-added tax, who are working in the field of taxes directly, including (managers, mangers’ deputies, departments’ heads, estimators, and accounts’ examiners) in all of the governorates of the West Bank including the employees of the department of senior taxpayers, where the size of this community has reached (412) employees, and a random sample with an amount of (184) employees, was selected from it, constituting approximately 44.6% of both departments, after the data was collected, it was processed statistically using SPSS program. The study was concluded after the Ministry of Finance in Palestine has truly applied the strategy of consolidation since approximately three years. The following are the main conclusions and recommendations: First: The taxpayers give approval on the process of consolidation of both taxes, the approval range has come in from medium to low in its fields of contributions, starting from limiting the tax evasion or expanding the base of voluntary commitment, or in increasing the outturn and collection,and ending with not contributing in the reduction or facilitation of the procedures of dealing with taxpayers.Based on that, we can see that “the consolidation of both taxes did not contribute a lot in raising the rate of tax compliance nor the income of General Treasury”. Secondly: The approval of the employees who were included in the sample in the other field related to the consolidation contribution of reducing and diminishing the level of operational expenditures, and the fifth field related to raising tax awareness among senior taxpayers was on a medium level. Thirdly: the approval of the staff in the first field which is related to the consolidation contribution in limiting tax evasion, and the third field which is related to the role of consolidation in reducing and facilitating the procedures of registration and reconciliation for the taxpayers files and in the fourth field which is related to increasing the outturn and collection, was on a high level. Based on the approval level that the employees expressed on the fields of the study, we can say that “tax consolidation did not contribute in raising the tax compliance of the taxpayers; on the other hand, it contributed to a great extant in raising the income of General Treasury”. Our recommendation to the administration of unification, in terms of the employees to seek achieving the satisfaction of the staff and acting fairly to them as much as possible, so that this could be a motivation for them to do their tasks and duties assigned to them. As for the taxpayers, this future administration- in the light of this consolidation- has to do all the necessary procedures and instructions that shall guarantee achieving a better level of the services provided to taxpayers, raising and enhancing the level of dealing regarding reconciliation of their files and reducing the tax burdens off their shoulders, in order to build the bridges of trust with them, and to change their feelings of being targeted for collection purposes only, without considering justice in their accountability.