Guest column: Paidamoyo Muzulu
TAXATION is the backbone of any national economy. The taxman has to collect revenue efficiently and ideally as equitably as possible from all the citizens and business. However, in many countries, including Zimbabwe, the wealthy and big businesses do not carry a fair share of the burden.
Last week, Finance minister Mthuli Ncube presented his 2020 budget strategy paper and the neo-liberal Treasury chief once again nailed his colours to the mast, and big capital would be smiling all the way to the bank as the poor and working class continue to carry a disproportionate burden of making the State work.
In his statement, Ncube said: “The 2020 budget will focus on enhancing revenue collection through advancing the ongoing Zimra and other administrative reform initiatives on broadening the tax base and closing revenue leakages,”adding that: “The revenue improving measures will, however, also be cognisant of the necessity of supporting the local industry through appropriate tax supportive measures and other tax dispensations.”
The devil is in the detail, but in this instance he only gave a pie-chart of the percentages of the revenues to be collected from taxpayers in 2020 and 2021. Companies will contribute 8,7% while value-added tax (VAT) will contribute 32% and individuals 9,5%. In 2021, companies will contribute 7,9%, while VAT and individuals will pay 32,3% and 8,9%, respectively.
VAT and Pay-As-You-Earn are the easiest picks for Treasury, simply because they are paid by individuals (working class and pensioners), who in most instances have no resources to hide their taxes evade the tax master. Ncube is not bothered by the increasing poverty levels among the working class as he goes on to promise business further tax cuts.
“The 2020 national budget will, therefore, review the existing tax incentives with a view of further improving productivity. Focus will be on rebates, exemptions and other tax and duty dispensations in support of exporters, special economic zones and projects qualifying for national projects status across all sectors of the economy,” Ncube emphasised.
The minister’s reliance on individual taxes and VAT exposes his support for big business and disregard for the poor working class. Debate around the world from progressive politicians is now centred on taxing the big technology companies and the super-wealthy individuals, most of who inherited wealth or are making obscene profits from investments that the working class can only dream of.
In July, French President Emmanuel Macron’s government broke ranks with other European Union countries and passed legislation to tax 3% on big tech companies on all business generated from France.
“The 3% tax will be levied on sales generated in France by multinational firms like Google and Facebook. The French government has argued that such firms headquartered outside the country pay little or no tax,” the BBC reported.
Across the channel, Britain is also toying with the idea of taxing big tech companies and hope to raise as much as US$4 billion within the first two years of implementation.
The United States, the richest nation on earth in terms of gross domestic product and infrastructure development, is having a serious discussion as the country heads for the 2020 presidential elections.
The most topical thing among Democrat candidates is the question of taxing the wealthy and redistributing it through social programmes like national health insurance, social housing and free tertiary education.
Democrat contender Berrnie Sanders, a socialist-leaning legislator, has proposed an aggressive anti-rich plan to tax billionaires.
“In order to reduce the outrageous level of inequality that exists in America today and to rebuild the disappearing middle class, the time has come for the United States to establish an annual tax on the extreme wealth of the top 0,1% of US households,” Sanders proposes in his election manifesto.
Another potential candidate, Elizabeth Warren, one of the front-runners for the Democratic presidential race, has called for a 2% annual tax on the wealth of individuals that have assets in excess of $50 million and a 3% tax on the wealth of people with over $1 billion.
It is not only politicians who think this way, two highly respected Yale University law professors Bruce Ackerman and Anne Alstott have also extensively written about wealth tax.
“We propose a 2% annual wealth tax on households owning more than $7,2 million in net assets. Such a tax would target the 0,5% of Americans at the top of the pyramid, and would yield at least $70 billion a year. This calculation is based on Federal Reserve data that we have updated to take into account the recession’s impact on housing and stock prices to 2009.
Because we have used very conservative assumptions, the revenue yield could well be higher,” Ackerman and Alstott wrote in their seminal paper.
Considering the aforementioned, it could be high time that Zimbabweans engage in a robust and candid debate on taxation in the country.
That Ncube could be bold enough to tackle big business is akin for one to seek ice cubes in hell, hence progressive forces in the country should rally together and demand that the wealth should equitably carry their fair share of the tax burden.
Zimbabwe has potential to finance free tertiary education, national health insurance and affordable housing for the working class, if only the Executive has the spine and can boldly look the beast of big business in the eye and demand a fair pound of flesh from their obscene wealth.
Society has never been about equality and we only seek equity in tax payment.
Paidamoyo Muzulu is a journalist and writes here in his personal capacity. He can be contacted on email@example.com