The Zimbabwe Independent
How can we make taxes work for women in Zim?
In any economy, taxes are the primary source of revenue used by the government to provide public goods and services to improve the quality of life and wellbeing of people (including women). In Zimbabwe, tax revenue contributes approximately 98% of the government’s total revenue and that shows how important it is. Tax can be the most sustainable source of funding the national budget if its functions and characteristics are respected otherwise it might end up hurting the very people it seeks to help. Women form a large part of consumers as they constitute around 52%-54% of Zimbabwe’s population, which means they are the largest consumers of taxes. On March 8, 2021, we celebrated International Women's Day (IWD). In this special month for women we must bear in mind the Sustainable Development Goal number five (SDG5) which seeks to achieve gender equality and empower all women and girls by 2030. The day was adopted by the feminist movement in about 1967 and the United Nations began celebrating the day in 1977. This global day celebrates women’s social, economic, cultural, and political achievements worldwide, making a call to action for quickening women's equality. It is therefore vital to dedicate this article to women, by discussing the economic impact of taxes on women and try to come up with, or propose, ways of making taxes work for women in Zimbabwe during and post-Covid-19.
Generally, there are four functions (4Rs) of tax which include: Revenue — that is collection of revenue by government to deliver the services citizens need; Redistribution — using taxes to address poverty and inequality through redistributing wealth from the rich to the poor within an economy; Representation — where paid tax builds accountability of governments to citizens/taxpayers and reclaiming policy space and characteristics of tax; and Repricing where tax makes it costly to engage in actions considered socially undesirable, or incentivise behaviour that is considered beneﬁcial to society. Furthermore, characteristics of a good tax system include the progressive fair tax that is as one’s income increases so should be his/ her tax share; Adequacy; Simplicity; Administrative ease and Efficiency. These four Rs and characteristics of a good tax system will assist us to understand and enjoy the discussion on the impact of tax on women.
According to Global Alliance for Tax Justice (GATJ)’s 2021 fact sheet for the Global Days of Action on Tax Justice for Women's Rights (From 15 to 26 March 2021) taxes must work for women and should be gender-sensitive because:
Women constitute 70% of the health workers — frontlines of the Covid-19 pandemic and as such it is vital for all taxpayers to pay their fair share of tax so that it can be channelled into the health sector to protect women.
Women are the primary beneficiaries of public services including quality education, access to clean water, security and safety, and social protection. If taxes are not adequate, austerity measures like cutting public spending and charging regressive taxes, disproportionately affect the lives of women.
Covid-19 increased women’s unpaid and underpaid work such as care for the old, the sick, and children as schools were closed during lockdowns. Taxes must be channelled to provide women with adequate public services and social security to lessen the heavy burden they are carrying.
When multinational corporations (MNCs) and wealthy individuals don’t pay their fair share of tax. It is estimated that for every US$1 received by developing countries through aid, foreign direct investment, remittances, more than US$2 are lost through debt repayments and illicit financial flows. Unfortunately, women and girls bear the burden of debt repayments, tax incentives, austerity measures, and budget deficit as a result of IFFs, generated through indirect taxes.
In Zimbabwe 2020 major tax heads which contributed to total tax revenue were Value Added Tax or consumption tax (25%), companies income tax (19%), PAYE (16%), excise duty (15%), Intermediated Money Transfer Tax-IMMT (8%) and customs duty (8%). A close analysis shows that indirect (eg, VAT and IMTT) taxes are contributing more than progressive taxes such as PAYE, which excessively affect women, exacerbating poverty and inequality. The Zimbabwe tax system has tried to use exemptions (eg, for pads which is welcomed) and zero-rating in trying to make them progressive, however, this benefits both man and women, rich and poor and they become less useful as the exempted portion is eroded by inflation as in the case of for IMTT.
In response to Covid-19 IMTT, was ringfenced in order to contribute towards Covid-19 government health requirements, the due date to submit income return was extended from April 2020 to August 2020 and VAT refunds were expedited. On another note, the government continues to offer tax incentives to attract FDI, borrowing especially resource-based loan (RBLs) as the country cannot access loans from the International Financial Institutions (IFIs), Paris Club, and other bilateral lenders because of arrears.
Furthermore, Zimbabwe is losing estimated tax revenues worth US$120 million each year to tax havens, which is equivalent to paying the yearly salaries of 53 232 nurses. Zimbabwe also lost an estimated US$12 billion in the previous three decades (ATAF 2020) and is losing an estimated US$100 million worth of gold revenues due to rampant gold smuggling (MoFED 2020). Revenue lost through IFFs prevent the government from providing public services, forcing the Ministry of Finance and Economic Development (MoFED) through the Transitional Stabilisation Programme (TSP from October 2018 to December 2020) to use austerity measures such as cutting expenditure on public services (for women) and charging regressive taxes such as the likes of IMTT, presumptive tax, and VAT which exacerbate inequality and poverty. MoFED claims to have used the 2020 budget surplus to support social services delivery, social protection and infrastructure which seem to be divorced from reality.
Zimbabwe has a huge informal sector (dominated by youth-67% and women 52%-54%), which is taxed through regressive indirect taxes and informal taxes which are cash cows for the government, however, this hurts the very people it seeks to help. In Mbare Magaba and Siyaso industries, informal taxes are charged on a daily or weekly basis to certain individuals, not to city fathers yet the sector is blamed for not paying taxes. If you go downtown in Harare, an area known as “KumaTucksops” IMTT is avoided as they accept cash only. IMTT is therefore selectively hurting the formally employed only which includes the likes of women health workers since they earn electronic money.
Globally, it said 9 out of 10 US$ billionaires are men, and during this pandemic, their wealth and profits have increased. Most men are the owners of properties (including shares) yet there are no wealth taxes in Zimbabwe to reduce the inequality gap between men and women. History also tells us that in 1980, the top 1% had 16% of global income, in 2016, it had 22%, compared with 10% of income for the bottom 50% (UNDP 2020). Furthermore, in 2020 the World Bank estimated that Covid-19 was likely to push between 71-100 million people into extreme poverty (mostly women in Africa) thereby increasing inequality. In addition, studies have shown that organisations led by women are more tax compliant than those headed by men because the former know that the revenue collected will be used to provide public services which will tend to benefit more women.
Women and youth must support globally, the Global Alliance Tax Justice (GATJ), regionally the Tax Justice Network Africa (TJNA), AFRODAD & ATAF and nationally ZIMCODD among others in advocating for governments to come up with taxes which work for women. Women should call for a just feminist economy, a good and gendersensitive tax system that is fair, adequate, simple, transparent, efficient, and easy to administer. Such a system will improve standards of living for all, not just women. The Beijing Platform for Action, encourages the government of Zimbabwe and other African states to recognise unpaid care work by women, reduce it by investing in more public services, redistributing it between men and women and rightfully reward care work. This may sound too feminist but it has tremendous benefits because care work improves our Ubuntu and the way our society and economy functions which can lead to economic recovery.
Woman are also calling for political support to reduce unfair tax burdens on women, removal of gender bias and discrimination in tax policies and laws and the adoption of a pro-poor progressive, gender just taxation policies. Wealthy people should pay their fair share of taxes through inheritance, capital gains, property taxes and other wealth taxes to raise more revenue which can then be redistributed from the rich to the poor. They are also calling for the removal or gradual phase-out (or make them progressive) of Regressive tax policies which have become a convenient option for raising domestic revenue in Zimbabwe but disproportionately burdening and affecting women, thereby exacerbating poverty and inequality. Evidence shows that progressive taxation can raise more revenues and the pandemic has revealed that fair taxation matters if we are to make taxes work for women.
In conclusion, globally there is a need to stop IFFs and harmful tax practices that facilitate tax avoidance and evasion that is biased towards wealthy countries, multinational corporations and the wealthy. The UN tax Convention and Intergovernmental tax body can be a solution to protect countries’ tax sovereignty and people’s human (women) rights from corporate capture. The current international tax architecture has failed to deal with IFFs such as global tax abuse by big corporations and wealthy individuals which are exacerbating women's poverty and inequality. Since we were in March, a special month for women, my appreciation nationally goes to Janet Zhou the Executive Director of Zimbabwe Coalition on Debt and Development (ZIMCODD) and Chenai C Mukumba the Policy and Advocacy Manager for Tax Justice Network Africa (TJN), from an economic justice point of view. These two leaders have made remarkable efforts to contribute to making taxes work for women and their views in the public domain form part of this article.
Learnmore Nyamudzinga is an economist, tax consultant, ZES member, holder of a Masters in Tax & Policy Administration and a Degree in Economics. These weekly New Perspectives articles are co-ordinated by Lovemore Kadenge, immediate past president of ZES. — kadenge.zes@ gmail.com or mobile +263 772 382 852