GLOBALLY the subject of tax justice has generated massive debate amoung academics, policymakers, politicians, human rights defenders and development partners.
The Tax Justice Network defines tax justice as “... ideas, policies and advocacy that seek to achieve equality and social justice through fair taxes on wealthier members of society and multinational corporations.” From this standpoint, therefore, tax justice entails focusing on tackling tax havens, curbing corruption and tax abuse by marauding multinational institutions and the super-rich.
Tax justice must be about ensuring sustainable development of nations and economies through championing transparent domestic revenue collection that enables states to provide the basic needs of the citizens, tackle inequality and in the process promote democratic governance at all levels.
An accountable and functioning State with the capacity to meet the needs of its citizens must eventually depend on its own revenues to champion the country’s development agenda.
Effective tax systems can also create incentives to improve governance so as to strengthen channels of political representation and curtail misuse of public resources.
This is precisely the reason why it is vital to continuously advocate for strengthened oversight and greater engagement of civil society and communities affected by tax-related decisions that will have been made without their voice and participation.
For a long time, players in the informal economy have been at the receiving end of corrupt, unfair and politicised tax systems.
Local authorities across the country have either been reluctant or lacked the technical acumen to put in place watertight systems that guarantee transparent revenue collection that fosters the growth and development of the informal economy which is currently estimated to be employing over 80% of the active labour force in Zimbabwe.
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In Harare, for instance, as a result of the local authority’s prevarication, stonewalling and lack of action, we have witnessed the rise of “space barons”, who have now illegally assumed the role of revenue collectors.
The revenue that would otherwise have benefited informal traders and the local gross domestic product ends up in the hands of a well-connected few and majority of whom have no connection to the informal economy ecosystem. In the meantime, all this is happening to the detriment of fortunes of workers in the informal economy.
It must be conceded from the onset that taxing the informal economy has never been an easy venture. The bulk of countries that have managed to develop sustainable tax systems for the informal economy have conceded that it was never a stroll in the park. This, however, does not mean it is impossible.
According to widespread studies, the major challenges in ensuring tax justice in the informal economy are anchored on the lack of political will to fund and undertake comprehensive, inclusive and transparent census of the operators in the informal economy.
Furthermore, proper structures of the tax base and templates for assessing and collecting taxes from the informal economy have not been adequately expressed and the need to reform to meet the international best practices and the standards of the informal economy itself.
What we have seen over the year in Zimbabwe are unstructured and emotional interventions especially from the Finance and Economic Development ministry and the Zimbabwe Revenue Authority (Zimra).
The introduction of the intermediated money transfer tax (IMMT), is a case in point. Under the 2% IMMT, a two cents per dollar tax is added to transactions between $10 and $500 000. This set-up is hitting hard on players in the informal economy because the majority make use of electronic systems to transact on a daily basis.
If interventions such as the IMMT are to be sustainable, there is need for broad-based participation, strengthening of the political and administrative commitment and genuine reorganisation of the tax administration. This must happen both at the local (local authorities) and national (Finance and Economic Development ministry and Zimra).
Tax justice contributes to transitioning from informality to formality
For the informal economy, tax justice that encompasses gender responsive budgeting and budget monitoring at national, regional and local levels is of crucial importance as well as being a key element of several international protocols and frameworks including the International Labour Organisation (ILO) Recommendation 204 of 2015 on Transition from the Informal to the Formal.
The recommendation provides guidance to members to, (a) facilitate the transition of workers and economic units from the informal to the formal economy, while respecting workers’ fundamental rights, (b) promote the creation, preservation and sustainability of enterprises and decent jobs in the formal economy and the coherence of macroeconomic, employment, social protection and (c) prevent the in formalisation of formal economy jobs.
All these noble targets of the ILO will be difficult to meet if the tax justice tenets are not met at all levels.
Tax justice help reduce the burden of unpaid and domestic work on women
In Africa, women constitute the majority of informal workers and they also have the added burden of unpaid and domestic work. Tax justice helps reduce women’s and girls’ unpaid care burden. Women’s and girls’ unpaid work is subsidising economic growth.
According to the GlobalAllianceTaxJustce, women spend 2,5 times more time performing unpaid care and domestic work than men, which has been valued at US$10 trillion a year, or some 13% of global GDP.
According to a survey that was instituted by Oxfam in June 2020, 43% of women surveyed across five countries reported feeling more anxious, depressed, isolated, overworked, or ill because they are having to shoulder even more unpaid care work as a result of the coronavirus crisis.
Where States don’t have enough revenue to provide essential public services, it is more likely to be women who fill the gap with their bodies and time, reducing the time they have for education, paid employment and rest and leisure.
Similarly, as more women enter the world of work without state support, the burden of unpaid care falls to other female members of the family. This can limit girls’ abilities to access education and other rights such as leisure time. This is particularly true in the case of women in the informal economy who work long hours.
Tax justice provides social protect for informal economy workers
Informal economy workers face various protection risks because of their vulnerabilities. Social protection programmes are therefore effective in contributing to protection and realisation of informal economy workers’ rights.
However, coverage of social protection is usually limited and more needs to be done to increase coverage to match the actual need.
A suite of social protection instruments including safety nets, economic inclusion programs, productivity enhancing measures as well as social insurance implemented with support of co-ordinated policies would ensure a continuum of social protection to the informal economy across the income spectrum.
Social protection programmes have previously been affected by lack of co-ordination as different agencies and development partners implement different programs.
Reducing vulnerability and poverty is a key element of many social protection programs as no society can gain social cohesion if significant sections of the population live in abject poverty and, therefore, countries need to increasingly providing social protection programmes in form of safety net programs for the most vulnerable and marginalised in the community