Tax culture and armed conflict, the Colombian experience
Hernando Vásquez, director of the tax administration in Florencia -Caquetá-, recounts his experiences in a territory controlled by guerrilla and paramilitary groups, hostile to the collection of taxes and where officials were expelled at gunpoint
21 July 1985. A student of Public Accounting at the University of Amazonia received a telegram telling him to present himself at the tax administration in Florencia, capital of the Department of Caquetá, where he had been hired as an administrative assistant. He is still with the Colombian National Directorate of Taxes and Customs (DIAN in its Spanish acronym) and held a number of positions in the areas of collection, accounting, recovery, settlement and inspection before becoming a sectional director. His career so far has given him close personal experience of the problems in ensuring compliance with tax obligations in an area affected by armed conflict between the government, the Revolutionary Armed Forces of Colombia (FARC) and other groups outside the law, as well as in answering the habitual question asked by taxpayers: "Why should I pay taxes, can't you see that they are stealing them?"
Working in an area where the state had a very limited presence and where authority was exercised by groups on the fringes of the law; being perceived more as a threat than as an opportunity; suffering threats and having, sometimes at the request of some business owners, guerrillas come down out of the mountains to intimidate officials, putting them back on the the buses they arrived in, under threat of death if they stayed. These were some of the difficult conditions prevailing in the north of Caquetá.
Those were tough times for overseeing tax collection and for being seen as a government representative. The municipality of San Vicente del Caguán was the epicentre of the negotiations in the first round of the peace process, and we moved there. On the outskirts of the town we had to pass through guerrilla checkpoints, where armed youths would demand to see our identification; if we visited businesses, very few would see us and if we invited them to talks giving guidance on taxes, the auditorium would be almost completely empty.
The public order situation worsened in 1999 when the San Vicente del Caguán Demilitarized Zone came into effect and the army withdrew. Officials were unable to visit taxpayers because of the clashes between the military and FARC on the roads accessing the towns and due to the destruction of bridges and electricity power lines.
At the same time the problems worsened with the appearance of new actors in the conflict, such as the United Self-Defence Forces of Colombia (AUC), paramilitaries who coerced business owners; who argued that they could not pay their legal taxes due to the extortion by these groups.
The Demilitarized Zone was abolished in 2002 and, due to the actions of the state and the military forces, a tense calm was established. This allowed the return of tax inspectors to the most important towns in the department, where they found taxpayers were still unwilling to pay their taxes.
As a result, the Regional Directorate launched strategies based on a taxpaying culture, aimed at building confidence in the payment of taxes and the role of the state.
This strategy began in 2004 with an institutional stand at the Florencia agro-industrial trade fair, where farmers and business owners from throughout the department converged. Staff presented the Regional Directorate as an entity with a dedication to service and helping taxpayers meet their tax obligations; in addition, the need to think about children and young people was addressed by decorating part of the stand with items they would find of interest. Visitors to the fair and the media were surprised by the presence of the tax administration at such an event, although as the days passed it became acceptable for taxpayers to visit the stand.
Initiatives to introduce children and young people to the culture of fiscal contribution began in 2007. Activities were undertaken with the support of the departmental and municipal education secretariats that would leave the participants with an inkling of the importance of taxes for the welfare of the Colombian people.
The start of the new peace process at the beginning of 2012 allowed our activities in the municipalities to continue: visits, tax collection, inspections and guidance. There was a greater receptivity to assistance in the fulfilment of tax obligations and even taxpayer registration, without the marked resistance of previous years.
A new project framed within the institutional policy of tax awareness began in 2016. With the support of the Subdirectorate for Customer Care Management, contacts were made with the University of Amazonia in order to set up an Accounting and Fiscal Support Hub (NAF). These NAFs allowed the administration to train university students in taxation issues, so they could provide free advice to people with low incomes, as well as to small business owners.
The objective of this and other initiatives to promote a tax culture, which had technical support from EUROsociAL+, is to improve the social acceptance of paying taxes in the areas most affected by the armed conflict, generating trust and reciprocity in tax matters between the state and its citizens.
In March of that year the students started to offer the services of the NAFs at trade fairs, during visits to public bodies, on the university campus and, during its first field exercise, on a visit to the town of San Vicente del Caguán.
At first hand: an NAF in the Amazon rainforest
The following describes the experience of the students from the University of Amazonia who travelled to San Vicente del Caguán to offer the NAF's services. It is a good example of how every small action helps to create awareness of how important paying taxes is.
The group of students left the university campus at 4 in the morning in two open-sided "chiva" buses and a coach in a torrential downpour which soaked those in the chivas, which have no windows, only curtains. The journey of three and a half hours took them along a route called "the edge of the jungle", which was being rebuilt; some of the way was on good quality road but on other stretches it was badly damaged. As they passed through the municipalities of La Montañita, El Paujil, El Doncello and Puerto Rico, the students heard comments from other travellers: this is where they destroyed the bridge, that's where they brought down the electricity pylons, a minibus was attacked on this stretch and several people were killed, etc. This made them a little uneasy, but they were sure of the importance of what they were doing for the community.
On arriving at San Vicente, they were taken for breakfast and then to the main park, where the stalls has already been set up. They organised the tables and chairs and started to give out tax advice, while one of the students used a loudspeaker to invite the community to take advantage of the free service the university was offering.
The day was very busy, especially for guidance to business owners, who requested information on formally registering their activities. The students did not meet any resistance and, on the contrary, felt there was confidence in the guidance they were giving. The team met up again at the end of the afternoon and returned to Florencia, arriving at around 10 o'clock that night, with the great satisfaction of having helped the community with the presence of an NAF in a municipality outside the capital.
This experience confirms the value of our first tax culture initiatives, which opened the way for business owners, farmers and small taxpayers to calmly accept not only the NAF but also the Regional Directorate. This has occurred to such an extent that we have been officially invited to open a contact point in the area, to avoid the expense of taxpayers having to travel to Florencia.
Now, on the verge of completing the peace process, an opportunity is opening for so-called post-conflict economic and social development, which requires institutional support. Opportunities are foreseen on all sides and social cohesion will be essential for this revival, because as well as generating rights, obligations are also being taken on, including the payment of tax. This is the job of the NAFs, in support of the DIAN: to strengthen the culture of paying taxes, especially in those areas where communities were most affected by the conflict.
Hernando Vásquez, director de la DIAN en Caquetá / director of the Colombian tax administration in Caquetá.