Galim Khussainov
Inflation and the tengeBankingLending and mortgagesTaxationEconomy and public policyManagement

Taxation · 1 min read

Taxes as the Price of Public Goods: The Problem of Fiscalization

Translated from Russian with the help of AI. Original: Russian version

Why willingness to pay taxes depends on whether people understand which public goods they receive in return and how their money is spent, and why fiscalization is less about compulsion than about a fair exchange of benefits.

One of the main problems facing developing countries is fiscalization. It is a very complex process, and it is less a matter of forcing people to pay taxes than of an equitable exchange of one set of benefits for another. Our taxes are not only about maintaining the state apparatus. They are a tool for redistributing part of income to socially vulnerable groups and for financing urban infrastructure and other public goods that become available to everyone. They pay for our healthcare, education, law enforcement and emergency protection, including fire prevention. When people clearly understand that they pay taxes in exchange for these benefits, they pay them willingly. When people do not understand how taxpayers' money is used, where it goes and how it affects their lives, their willingness to pay taxes diminishes.

When we do not pay taxes, when we prefer an unlicensed taxi to a licensed one, when we do not ask for a fiscal receipt, or when we bribe a police officer or give a doctor an expensive gift. When we hire a nanny without formal employment or build a house without a permitted design and then settle the matter at the Akimat. All of this means we cannot afford a decent healthcare and education system, decent benefits for the socially vulnerable, decent fire safety inspectors, and so on.

But all of this also reflects the fact that ordinary people do not understand how their taxes are allocated, and why everyone wants to be a civil servant rather than a mechanic, a doctor or a teacher. Efficient allocation of tax revenue is the key without which it will be hard to get people to pay taxes. Taxes are our payment for the benefits we receive from the state.

Published in: Facebook, 8 March 2019

More on this topic

The 2026 Budget After Seven Months: Where Revenues Really Fell Short

How a year-on-year comparison of the first seven months of 2026 with the same period of 2025, rather than a comparison with the plan, shows that tax revenues rose by 17%, and why the stronger tenge (484 per dollar versus 514), not the tax reform, explains most of the shortfall against plan. The reform did reduce local budget revenues, mainly through a lower personal income tax (PIT) burden, and shifted the tax base toward the national budget.

VAT Refunds for Agricultural Exporters

How a personalized VAT refund mechanism for agricultural exporters could address the current system, under which up to 80% of claimed VAT is effectively not reimbursed and large and small agricultural producers are put on unequal footing. The proposal would deny exporters a refund only for the VAT portion matching the producer's benefit (6.4% of turnover in the KZT 100 million example), rather than for all input VAT.

On the Construction Market

How the new Tax Code, including the VAT increase to 16% and the extension of VAT to apartments whose construction begins on or after January 1, 2026, will affect housing construction in Kazakhstan. It examines why the end of small-business tax breaks will raise construction costs, cut developers' net sale prices and profits, and pose risks for the regions, with the effect expected to be felt from 2027.