There has been a lot of talk over the IMF’s tax proposals ever since the Post newspaper “uncovered” the proposals of the IMF to our government over next years tax program. Many people have commented from all kinds of sectors, including the business community, academia, the unions, opposition party leaders, and so on. It seems everyone is unanimous on this one: the IMF’s proposals are destructive, they are evil, and so on.

Whenever you see such grand consensus, you have to be careful. It is usually a bad sign, a sign that many people are missing something. On every issue of such complexity a certain amount of disagreement should be expected. In this article, I offer another side, not because I want to play Devil’s advocate but because I sincerely believe that people are missing something very important in their criticism of the IMF on this issue.

Before I give my defence of the IMF, let me first make my position on this institution very clear. I am actually AGAINST the IMF’s existence and operation in Africa (and anywhere else in the world). I believe they do more harm than good through their programs, and I believe Africa would have found her path to prosperity more easily without the IMF and World Bank than with them. Many people who know this writer as a capitalist get surprised to hear such sentiments (especially after suspecting that he has been paid by them!), but this is only because they do not understand real capitalism (and wrongly associate capitalist ideology with the IMF).

A real capitalist cannot be in support of such institutions because they act contrary to the fundamental principles of capitalism in many ways. Even when they recommend certain policies which are right (like privatization and liberalization), they still operate in a wider context that is opposed to capitalist principles. I am opposed not only to the IMF and World Bank, but to all the other donor institutions that are trying to “save Africa” by “doubling” aid and so on. Thus I am convinced that Gordon Brown, rock artists Bono and Bob Geldof, economist Joseph Stiglitz, and many others who think that Africa can be developed by increasing aid to the continent, are as lost and misguided as the IMF on this score. Though they are very sincere in their efforts to help Africa, their efforts can only make the situation in Africa worse, not better. Open your eyes: Africa is not in need of aid at all.

Now that I think I have stated a clear position on the IMF, let me proceed to defend them on this recent issue that the Post has brought to the attention of the public. Just because I am against the IMF does not mean I should blindly believe every misguided accusation laid against them, without properly analyzing the full context of such allegations.

The picture presented by the Post and others is simply that the government asked the IMF what the tax structure should be like next year for Zambia and the tax experts at the IMF just decided to bring in all these high taxes on all kinds of things (including mosquito nets). This indeed makes them look quite evil because they should be concerned with the already burdensome tax regime the Zambians are facing. How could they make the situation worse for us?

But if you think about what actually happened, you will see that this is simply a gross misrepresentation of the real process. There is something very important that is missing in this whole story. To understand this missing link, you have to take a few steps back in this tax consultation process.

If I come to you as an expert and tell you “I want to raise 40 million kwacha to buy a car at the end of this year; what should I do?” The first thing you will ask me is “what are the sources of your income?” And I will tell you, “I sell some buns on the side and I raise 1 million kwacha per month from that, I also have a monthly salary of 2 million kwacha.” As the expert, you will then take your calculator and advise me, “from your salary, save X million kwacha, and then save the whole money from your buns business; you will buy your car at the end of the year, assuming inflation remains at point Y and the kwacha exchange rate to the dollar remains at point Z.” You will answer me according to my stated needs and from the (limited) sources of income that I present to you at the moment of the consultancy, not from things I might be dreaming about doing or money I might be hoping to receive from my uncle.

What am I saying? The government didn’t just go to IMF to ask what the tax structure should be (in a vacuum); the government told IMF how much money they wanted to raise from the taxes and THEN they asked IMF for advice on how that money can be raised, given a certain list of economic activities in the country that are traceable. If government goes with a budget of only 100 million kwacha, the IMF can tell them to raise that money by just taxing people 1 per cent of their income or something. But when government goes with a budget of 4 trillion kwacha, the IMF can’t tell them to lower taxes! The IMF (qua tax consultant) is not just an evil institution that wants to punish people with high taxes; they simply respond to the request laid before them by a government, according to the needs and parameters stated by that government.

The critical thing we should have been discussing therefore is, how much money did the government tell the IMF that they needed? And we should then ask, why did the government need so much money in the first place?

The failure to ask this question is what has made Africa remain poor in a world where everyone else is becoming richer. This is the simple reason why we are poor. We ask the wrong question and we target the wrong culprits. The IMF is not the culprit here; it is our own government that we should be questioning. They are the ones who presented the terms of reference to the IMF, those parameters that the tax consultant should keep constant as he gives his advice.

The reason we fail to see this problem as intellectuals is simply that most of us are socialists (consciously or not). We think that government should raise money to help poor people and to build soccer stadiums and so many other things that we allow our government to do “for the people”. We are possessed with this irrational guilt that makes us support all government programs to help the poor and this is what makes the government budget so huge. And when the government asks the IMF how to raise such a huge amount of money, the IMF will simply show them the many places they could extend such taxation; there is nothing evil about that. If we do not want them to say the tax should extend to newspapers, then we should not give them a bigger budget. If we give them a huge budget and ask them how to raise that money, what do you want them to do? You want them to say, “pray for that extra amount to drop from heaven”? You should consult a priest if you want such an answer, not a Harvard-trained tax consultant!

Some people have gone as far as boldly demanding that the government should ask our local “tax experts” next time instead of asking the IMF. But the fact is that even our local experts will have to struggle to find these other sources of tax given the stated needs of the government. A few people have made attempts to do better than the IMF by suggesting other sources of tax income, but these suggestions have just bordered on the ridiculous. Mr. Mark O’Donnel suggested that government should start taxing people who work in the donor community (on the things they buy, etc). But he did not bother to find out the international laws that govern such fields before he made his ridiculous proposition? And this just shows you how hard it is to find these alternative sources of income; my bet is that our so-called local experts will just come up with worse nonsense. The only answer is that the government should not NEED such high amounts of money, and then we won’t need to start raising taxes or finding more sources of tax. If you want government to lower taxes, you should be insisting on lower spending. It’s that simple.

Being a capitalist (instead of a socialist) means that I do not believe in huge government expenditure for social and similar purposes. Government should not be giving money to poor people, it should not be giving them free fertilizer, it should not be giving them free education and any such things. They should pay for themselves, and they should ideally pay to private educators. But how can they pay when they are poor? Yes, but how can they not be poor when they are taxed so much? How can they not be poor when even the companies that could have employed them are taxed like hell in order to meet these same budgetary programs of the government – most of which go into paying for government bureaucracy for this same work? The government is the creator of the problems it tries to solve – and the very attempt to try to directly solve those problems is what causes those problems! It’s a vicious cycle.

The IMF can NEVER say what I’ve just said in this article. People accuse them of being ideological, but that is the last thing that the IMF are. Had they been capitalists, the first thing they would have recommended is their own dissolution because they stand in the way of capitalism by their very nature as an aid institution; they are an anti-capitalist institution that unwittingly sponsors government socialism globally, both through their money and through their consultancy. Raising taxes is a blatant contradiction of capitalism and if the Post editors realized that, they would immediately stop associating the IMF with capitalist ideology.

But at the very base of this pyramid of culpability is you – the person who supports socialist nonsense because you think that government is there to intervene in the economy. Government should not intervene in the economy, just as it should not intervene in religion, or in the media, or in personal morals, and so on. The only job of government is the efficient implementation of justice and protection of its people against the forces of injustice, the enemies of peace and reason. They are not there to give free fertilizers to small farmers or even to build modern houses for people in shanty compounds. Both the ruling party and the opposition parties are wrong and neither can ever lead this country to prosperity without this critical ideological transformation.