Taxation, an age-long practice, is a form of levy that enables various forms of regimes not only to survive, but also provide essential services to their constituents. Examples include provision of labour, tithe, cash or other means of exchange widely accepted in place of money. In Egypt for instance, poor peasants unable to pay their taxes would provide free labour to the state. Taxes have also been used by regimes to restrain undesirable conduct or reinforce public policy. For instance, some authorities would impose tax on imported goods to reduce their consumption, or hike parking fees to curb congestion in cities and encourage public transport.

The world over, taxes have not been readily accepted due to their imprints of dominance and imperialism. In pre-independence Africa, British colonialists imposed a ‘hut or household tax’ that was highly contested. The Jumbe (Chief, ruler) would send their emissaries to collect kodi (tax) from every household without fail. Over time, people expressed discontent by running away whenever the tax messengers came calling. But as they would say in my local dialect ‘mkono wa Jumbe kauuya kihuhu’-the Chiefs messenger cannot go back empty handed – the messengers would pick literally anything from that homestead, even in the absence of the owner. This further aggravated its unpopularity.

The practice may have transformed with time but the principle has largely remained the same: citizens must subsidize the operations of their respective regimes. Some regimes have been proactive in forging better relations with their citizens by adopting very progressive tax systems, while others have not evolved much. Whatever the case, taxes are not anything we can wish away. Benjamin Franklin affirms, in this world nothing can be said to be certain, except death and taxes. Love them or hate them, it is important to appreciate that taxes are here to stay. Indeed they are the quick-fix darling of many governments as they provide the easiest means to financing deficits in national budgets. 

 Why should individuals and other legal entities care to pay tax? Given the relationship that people have had with tax collectors, many have tended to liken paying taxes to being mugged by governments and they would rather not pay tax at all. But are taxes that bad really? The answer may vary from person to person given the interactions they have had with their regimes. But one thing will stand out- an effective, just and progressive tax regime that also manages the revenue generated to deliver quality service for the public good will be appreciated and supported by all citizens of sound mind. People love contributing towards organizations that are promoting public good, making life bearable for the majority. Who would mind better roads, better healthcare, and better education infrastructure? 

Governments exist as a social contract between citizens and the state, where individuals have consented, either explicitly or tacitly, to surrender some of their freedoms and submit to the authority of the ruler or magistrate (or to the decision of a majority), in exchange for protection of their remaining rights. Taxes are the price citizens pay for the goods and services they collectively provide for themselves and for each other. In other words, taxes are the lifeblood that helps governments deliver their mandate – like caring for the elderly, establishing justice, providing public education, developing infrastructure, protecting the environment and paying salaries. The war on terror is largely funded through the taxes, so is the responsibility of maintaining internal order and security. If anyone cares for these courses then they should feel obligated to pay tax.

Taxation, inequality and human development

There are numerous benefits to paying tax but one that stands out is bridging the gap between the rich and the poor-addressing inequality. There is general consensus that growing inequality today poses the greatest threat to human development and must be tackled now. At the national level, one critical strategy for reducing inequalities is ensuring universal access to good quality basic goods and services: food, housing, basic amenities like water and energy, health services, education and social protection.

Programs such as the Free Primary and Secondary education that have helped thousands of children from poor backgrounds access education, free delivery in all public maternity hospitals, and cash transfers targeting the elderly would not have been possible if citizens did not pay their taxes. Furthermore, negative income tax (NIT), a progressive income tax system where people earning below a certain amount receive supplemental pay from the government instead of paying taxes to the government could only be possible if government had enough money in their coffers.

Countries that have succeeded in financing their national budgets from internally generated revenues such as from tax and trade, register higher development indices/outcomes. On the contrary, those that rely heavily on external borrowing increase their domestic debt which has potential to impede rapid economic growth. Choices must be made but ones that favour addressing poverty by tackling inequality must be prioritized by all well-meaning regimes.
      
Billions are lost through corruption and corporate tax evasion

There is growing discontent among citizens who feel they are often made to pay more taxes than they probably should. On the other hand, some corporates are accorded special treatment, enjoying a myriad of privileges often not extended to ordinary citizens. Corporates for instance enjoy massive tax benefits as an incentive to invest in developing countries. A closer look at how this kind of treatment benefits the developing economies leaves more questions than answers. A recent report reveals that Africa loses much more through corporate tax evasion than it receives in aid. While annual global aid is less than $30 billion, the continent incurs loss of $58 billion every year. Africa loses $192 billion annually to the same countries that provide aid.  The illicit financial flaws report places this loss at a staggering $1.4 Trillion in the period 1980 – 2009. In their latest report, ActionAid exposes how one company managed to avoid paying taxes worth $43 million in Malawi It’s not difficult to imagine how these revenues could turn around the economies of many African countries.

In a bid to increase their revenues, governments cast their nets wide to capture all sectors. These attempts affect people differentially and can be quite injurious, especially to people living in poverty and exclusion. Value added Tax charged on basic food items for instance is quite regressive, as it does not discriminate persons with high disposable incomes from those poor people who are barely struggling to survive. Corporations and their proprietors can quite easily avoid tax and legally so by for instance writing their luxury items as company expenses.  On equal measure, governments should reign in on corporations who fail to pay their fair share of tax.

As citizens do their part, government must not relent

In countries with indefensible debilitating wage bills, corruption scandals is the last thing people want to hear about. However weak laws and lack of proper oversight have left many developing economies vulnerable to glaring abuse. Members of parliament and other elected leaders have for instance taken it upon themselves to determine and increase their salaries at will. Further, billions have been lost through high level bureaucratic corruption scandals, to the disenchantment of many helpless citizens. If not satisfactorily addressed, these deals have potential to significantly erode public confidence in the administration. Thus, governments are faced with an enormous but surmountable challenge of cultivating and sustaining confidence by collecting revenue and ploughing it to the public good, as well as dealing decisively with any corruption scandals to the satisfaction of their citizens. Their conduct must be beyond reproach.  That way, citizens will feel obligated to pay tax as well as motivated to take care of any infrastructure development on their behalf and for the public good.

Thus, as citizens make the long queues to meet their end of the bargain, governments must also be ready to do their part in this social contract; otherwise, civility will not prevail.

By David Barisa
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