ARE THE NEW MINING TAXES JUSTIFIED?

By Chanda Chisala, Editor, Zambia Online. 22 February 2008
It seems to me now that no matter how much I write on capitalism, it is not too many people in my country that I will influence to fully and consciously change their mind. Perhaps a future generation will find these articles on the internet and understand this philosophy, but I am no longer optimistic that many people in this generation will accept it. There are some people of course who say they have changed, but when an actual, concrete issue comes up – like the current thorny issue of taxation of the mines – they always reveal that they are still fundamentally and practically socialists and anti-capitalists.

A capitalist is always against high taxation, and he is therefore ALWAYS against raising of taxes for anyone, anywhere, whether it is individuals or businesses. He is always pro lowering of taxes for everyone everywhere. Thus I am for lower taxes for the mines, for the farmers (including tobacco farmers), for oil marketing companies, for banks, for importers, for exporters, for employees, employers, etc - for every company, person and product. For all production and for all consumption.

But what about sharing the burden of taxes? Shouldn’t we be happy when more people are included in this “net”? No, we should not. Instead of pushing for more people to share in this heavy burden, we should be fighting for the burden itself to be lifted or at least lowered, and radically so. In short, we should be more concerned about the “expenditure” of government (including thefts) so that we can all be able to have smaller taxes. When you start talking about “widening the net”, you have accepted that the amounts of money the government collects are justified – you only want more participants in this “net”. As this article will argue, it is the amounts themselves (the total taxes) that should be radically reduced, instead of “the tax net” being widened.

The most disturbing thing about most of our people is simply their failure to consciously integrate different but related events or phenomena. For example, right now there is this big issue of mine taxation, and almost everyone has taken the side of raising mine taxes. But at this same time, we also have another issue of money misappropriation (theft) in nearly all the government ministries amounting to many hundreds of billions of Kwacha reported in the recently published Auditor General’s report. The Zambian people, instead of seeing the connection between these two issues, have decided to leave them disconnected in their minds and therefore they have formed logically contradictory responses to them.

Is there a connection? Most certainly. If so much of the money that goes into government is stolen, why do we want them to have even more money collected from more taxes? And also (a third issue), if so much of the money that the government collects in taxes is not even used at the end of the year (because they can’t find projects for it or they can’t approve the projects on time), why do we want to burden the government with more money?

So, we have a situation where government administrators steal a lot of the money they collect from taxes, and there is also a lot of money that they fail to use. We know these facts. And yet we still fight for government to collect more money from more sources and to increase taxation levels for others!

But even more, we also know that a lot of the money that is used and not stolen, is misused. Government buys new expensive cars for people who do not need them, sends people on foreign trips that do not make any difference to anything, creates workshops that have no real meaning or impact, pays people for just wasting time (including sending off and welcoming the president on his countless trips abroad – and this includes putting gas in their vehicles when they go to the airport to just shake his hand), and so many other unbelievably irresponsible wastages for such a poor country.

What we have in Zambia, therefore, is unused money, abused money, and misused money. The little that remains is what actually goes into “social projects” that the government has planned.

And when we analyse the same social projects that finally do get some money, again we see clear signs of incompetence or corruption. The roads that are built are destroyed when the rain season comes, the bridges are washed away, and so on. This means even most of that money that finally reaches the social projects, besides the misused, abused and unused money, is also wasted through mismanagement or corruption (in connivance with those who “win” the project contracts). The money that was previously budgeted on the roads has to be budgeted again, for the same projects, because they were not properly done. And the government will simply repeat the same tendering processes, hoping that somehow, by God’s abundant grace, the results will be different this time!

But the tax payers do not make too much noise about this; instead, they want government to collect even more taxes from more people; they want the “net” to be widened. No matter how many years pass, the money will continue to be unused, abused, or misused (and we’ve been saying this for many years). The president will make some speeches, promising to deal with the “abused” money, the finance minister will promise to deal with the “unused” money (no one will try to deal with the “misused” money because they all personally benefit from this one), but nothing shall really be done about it. And yet no one will take them to sustained and persistent task over this.

The NGOs will release some statements when the auditor general’s report comes out; they will also say something when the budget money remains unused, and so on. They will then write to donors for more sponsorship, attaching newspaper clippings of their published statements, to show that they are really active in their advocacy, and that’s it. They will receive more money for themselves, build bigger houses, and just wait for the following year to see more things to make some noise over, so that they can get more “funding”.

In short, we are living in an intellectually corrupt society that has no commitment to truth and values, whether among the leaders or among their ostensible opponents. And many innocent people just follow the wind and fail to analyse and integrate the facts on their own. They are comfortable being on the side of the loud majority, even if it is an irrational side.

The fact is that government’s urgent need is not more money. It seems to me that the government clearly collects much more money than it really needs, since most of the collected money is either unused, abused or misused. If government collected only five percent of the taxes it collects, it can still meet all the things it promises to do (socially), if this money is just properly and honestly managed.

So even if you forget the fact that I am against most of their expensive social projects and the existence of many irrelevant ministries; even if we assume that all the projects they budget for are actually good and necessary, the government still collects too much money which only goes to waste through misuse, abuse and nonuse – very little of it actually reaches these alleged “poverty reduction” projects. Only the poverty of the leaders and “workshopaholic” technocrats is reduced. Only their personal bank accounts are “developed”.

It would be better if this money stayed in the hands of the producers; if this money remained with those who are actually creating wealth and creating jobs, those who are working in productive endeavors; instead of going to sit in idle government accounts, or simply to be stolen by parasitic non-producers in the civil service. When money stays with the producers, it is much, much more effective in adding to reduction of poverty in the nation than when it goes to government (to be stolen or misused or unused).

So, even on that basis alone, it puzzles me that most people are celebrating the fact that the mines are being forced to pay more taxes to the government. We are supposed to be advocating for lower taxes, not higher ones, for everyone. And we are supposed to be on the side of every victim of raised taxation, no matter who they are or what they do, simply on principle.

And above all, we ought to be forcing government to reduce taxes by the factor of the amount of money that was abused, misused, or unused in the last budget. After all, what difference would it have made if they hadn’t actually collected those billions in taxes that ended up being only misused (and it is the bulk of the money)? This is the only kind of advocacy that would bring prosperity and kill poverty in the nation, if enough people simply understood it and became rightly annoyed about all the nonsense going on, instead of targeting their wrath on innocent producers.

But to be very honest, I currently have no hope whatsoever that even this article will make any difference in our society: we are too deep into this socialist, big-business-hating mindset that President Kenneth Kaunda created in the minds of his people through constant anti-capitalist and anti-profit propaganda (especially when foreigners are involved). So deep that sustained objectivity is virtually impossible, even when we can intuitively see the clear sense in someone’s logic.