By Evans Ongwae

Most Kenyans believe that the government rarely meets its revenue collection targets mainly due to tax avoidance and evasion.

While tax evasion is any illegal step to avoid paying levies due to the government, such as not declaring income to revenue authorities; tax avoidance is the legal means of out-manoeuvring the tax regime by finding ways to pay the lowest rate of tax or none at all.

The abuse of existing tax loopholes through the combination of avoidance and evasion, makes Kenyans believe that this is one of the main reasons forcing the Government to borrow externally to bridge budget deficits.

A majority of the people surveyed across the country in June 2021 by the East African Tax and Governance Network (EATGN), said this was a key reason for why government does not achieve its tax collection targets.

About 31 percent of Kenyans perceive tax avoidance and evasion to be more problematic in achieving annual revenue targets than corruption or theft at 26 percent; poor economic growth at 20 percent; unrealistically high Kenya Revenue Authority (KRA) targets at 14 percent; and the burden from Kenya’s debt repayments at two percent.

Reacting to the findings of the study, titled, Revenue Collection and Economic Justice: Kenya National Tax Outlook Survey – 2021, Oxfam’s Riva Jalipa says people with means are exploiting legal loopholes to avoid paying their fair share of taxes. “They use accountants and lawyers to pay as little tax as possible, or none at all,” says the tax justice strategist.

By

Tom Odhiambo

Title: Framing Feminist Taxation; Publisher: Global Alliance for Tax Justice (GATJ); Authors: GATJ; Publication Date: June 2021; Pages: 53.

Electronic Access: Free Download, Use the free Adobe Acrobat Reader to view this PDF file.

When one speaks the word ‘feminist’ it often conjures images of a woman or women who are ready to fight ‘patriarchy’, in a manner of speaking. In fact, in many parts of Africa the word is taken to mean women who are ready for a confrontation with men and other women in any subject that touches on women’s rights or lives.

To claim to be a feminist suggests a battle, a war, a cause to fight for. In many cases, African feminists – women or men – tend to speak eloquently and act stoically about the rights of women in the society in which they live. Thanks to the global rights movement, there are feminist activists nearly in all parts of Africa.

Yet, the language and pursuit of human rights tends to throw fog on the finer details of everyday human struggles. The discourse and practice of human rights, for instance, is often not translated into the minutiae of economic, political, cultural, social, religious, or spiritual rights for women in specific communities.

Even where human rights defenders isolate the task at hand as particular rights to do with women, say the right to go to school for the girl child or the right to access maternal health care – the concerned individuals and institutions gloss over or do not link the lack of these rights to institutionalized economic marginalization.

Yet, struggles for human rights need to see the bigger picture in which a range of practices and institutions interconnect to cause one deficiency or another. For instance, how does tax affect women’s livelihoods, lives, and socio-economic, political, cultural, personal or even gender rights.

Reading Framing Feminist Taxation (2021) a tax guide based on experiences from Uganda, one realizes the urgency of looking at and understanding how tax and taxation affect women from a multi-sectoral perspective if not perspectives.

This guide is divided into four parts: Introduction to International Financial and Tax Architecture; Feminist Perspectives and Principles; Feminist Economics: Reimagining the Economic and Tax Systems; From Plans to Actions – An Advocacy Guide for a Feminist Taxation Framework to Fulfill Women’s Rights.

In the first section, the authors outline the need for knowledge on who or what institutions run the global financial system and how these individuals and organizations determine global or local economies plus their tax regimes.

It is important that fighters for and defenders of women’s rights should know how the IMF or African Development Bank or the African Union, a few of the organizations mentioned in this section, make decisions that impact local industries, commerce, taxes and lives of all and sundry.

Considering that taxes and taxation affect savings, investments, and livelihoods, how do the policies and actions by such organizations affect women’s lives in the short and long runs?

The second section reprises the old question of power equation in society. What is power and how does it manifest itself? How does such power affect economic production, collection of public revenue, distribution of such revenue or the tax burden for women and men; for the poor and the rich; for the abled and the disabled.

Framing Feminist Taxation notes that power appears in at least three forms:

1. Visible power – that which one sees and feels in public such as held by politicians or bureaucrats, or as held by heads of households or clan heads, even heads of criminal gangs, a majority of them tend to be men,
2. Hidden power – this about the agenda setters or influencers or members of a caste or economic group,
3. Invisible power – which is the capacity of individuals or institutions or any other force to shape people’s views, beliefs, needs, biases etc, such as is done by social media these days or even religious or political leaders through rituals and doctrines.

The third section reminds readers of the seeming deliberate inattention to women’s economic productivity by orthodox economics.

Although it is not a new claim, Framing Feminist Taxation reinforces the argument that traditional methods of measuring economic production in a country, Gross Domestic Product and Gross National Product (GDP and GNP) do not consider the amount of time, resources and the productivity of women who work every day in the houses or homes they live in.

Raising children, cooking, cleaning the house, maintain the home etc are hardly factored into the measures of economic production and growth. Most of these are duties are performed by women.

Section Four is an outline on what can and should be done to make women suffer less from taxes and taxation. Here, the authors of Framing Feminist Taxation root for action rather than more policy formulation. They argue that from a feminist taxation perspective, there is need for more campaigns for tax justice for women’s rights.

They note that individuals and groups need to identify a problem and thoroughly analyze it; think through the advocacy approaches, such as engagement with the media, directly demand action from policymakers and holders of power, mobilizing the public to leverage pressure, and use of digital communication and online media; engage with other women’s organizations to learn from their experiences and also seek support; target specific organizations – public and private, local or international – in the advocacy campaigns, among others.

One of the key lessons Framing Feminist Taxation offers is the need to rethink the traditional approaches to tax and taxation where women are concerned. For instance, why would, for instance, any African government zero rate, computers, or solar equipment but tax paraffin, which is used by a majority of poor households for lighting and cooking?

Why do governments continue to tax women more than men when they tax a married couple as a single unit? In such cases, the woman’s income is treated as a ‘second’ earner, thus suffering a higher tax burden, when they are also likely to be earning far less than the husband.

A feminist approach to taxing the couple would prefer them to be taxed separately – yet the intersection of culture, economics and social practice predisposes the woman to almost a career and lifelong disadvantage. Why? Simply because she is married but also working.

But to change the way the world sees women, taxes and taxation will also mean to literally change the way societies educate the young.

A feminist approach to tax and taxation needs to adopt a multidisciplinary and holistic approach that seeks not just to empower women and advocacy groups to be alert to the networks and processes that overtax women and underspend on their needs.

Such an approach will have to be ever vigilant for the insidious nature of economic exclusion, disadvantage and alienation through socialization, acculturation, education, and other practices of everyday life.

The writer teaches at the University of Nairobi. Tom.odhiambo@uonbi.ac.ke

The East African Tax and Governance Network (EATGN) is proud to launch two studies namely: REVENUE OBLIGATIONS AND CIVICS IN EAST AFRICA – A Human Rights Based Approach to Tax Justice plus ECONOMIC SUSTAINABILITY IN EAST AFRICA – Framing the Linkages Between Public Debt and Tax Justice.

Publication of these works is a culmination of EATGN’s ambition to facilitate the conduct of human rights public debt management research in understanding its linkage to tax injustice in East Africa. EATGN hopes to spur interest from academia, policy makers, faith-based groups, private sector, and civil society organizations (CSO), to understand and advocate for better tax policies within their spheres of influence to achieve sustainable development goals (SDGs).

Download: Revenue Obligations and Civic in East Africa | Economic Sustainability in East Africa. Visit our Publications page.

PHOTO CREDITS: Global Initiative Against Transnational Organised Crime

Today, the artisanal and small-scale gold mining (ASGM) sector is governed by increasingly comprehensive legal and regulatory frameworks and is reliant on transnational supply chains that connect rural mining operations to international gold hubs. However, the increase in illicit activities in gold-rich markets has undermined the potential for this precious commodity to be a catalyst for development in these regional African markets.

Effective responses to illicit activity in gold markets must seek to navigate the tension between combating criminality while maximizing the gold sector’s development potential. This requires a nuanced analysis of market dynamics, supply chains and networks. This study unpacks the factors that shape and drive the East and Southern African gold markets.

Research covered multiple countries, providing insights into national and regional market dynamics and trade flows. The cross-border regional dynamics of illicit gold supply chains means examination of this issue requires applying a wide lens. South Sudan, Uganda, Kenya and Zimbabwe were selected for field research, with some limited research conducted in South Africa.

PHOTO CREDITS: Transparency International

Our favourite whistleblowing film would be an unthrilling, action-free short. In it a whistleblower uncovers wrongdoing, reports it anonymously without fear of retaliation and gets on with their day. They can do so because whistleblowers worldwide are valued and fully protected. Boring, wonderful and guaranteed to put a smile on a corruption fighter’s face.

Unfortunately this is not the experience of most whistleblowers, many of whom risk their jobs, freedoms and even their lives to expose wrongdoing. Their bravery has saved countless lives as well as billions of dollars, and there are some fantastic films that show what they can go through as they do the right thing; from the discovery of wrongdoing to the inner conflict about whether to expose the truth to the aftermath of their shocking revelations.

Here are the eleven best films about whistleblowers that we’ve seen. Let us know if we’ve missed a great one.

PHOTO CREDITS: Centre on International Corporation (CIC)

By

Attiya Warris

There are multiple examples of solidarity taxes imposed across country contexts over previous decades. The solidarity taxes that were levied were done to mitigate effects of a crisis such as a pandemic, as well as rebuilding of nations that had been affected by world wars (examples include Zimbabwe and Germany).

Considering the renewed interest in solidarity taxes in the wake of COVID-19, author Attiya Waris reviews the history of solidarity taxes, and discusses key lessons from the past, in addition to drawing these lessons and findings into policy recommendations moving forward.

By

Appolinaire Nishirimbere

While the COVID-19 pandemic struck and is still ravaging the entire world, tax dodgers are intensifying their tricks to steal more and more from the poor. This is increasing the inequality gap plus negatively impacting developing countries like Burundi.

To cope with this situation, as it appears in its National Development Plan (PND)[1], Burundi intends to rely on domestic resource mobilisation namely the mining sector to propel its economy. In fact, the country not only holds 6% of the world’s nickel deposits but also has gold, tantalum, tin, tungsten, rare earths plus industrial minerals including kaolin, phosphates, and limestones.

However, despite all these efforts, the Burundi Revenue Office (OBR) regrets the huge losses in the sale of minerals. So where does the money from the mining sector go and who benefits from it? Under normal conditions -given the wealth of Burundian subsoil- mining could significantly contribute to job creation, diversify the economy, allow the transfer of technology, and contribute to the increase of state revenue. However, so far it contributes to only 1% of the GDP and 3% of Burundi’s export earnings.[2]

This situation is explained, on the one hand, by the fact that mining activity in Burundi has hitherto been dominated by traditional methods characterized by rudimentary exploitation techniques, low production capacity, and non-compliance in environmental standards. It is also hampered by unfair practices such as tax evasion and avoidance. Furthermore, it is recognised that there is a significant gap that exists between the declaration ​​in production, exports of mineral substances and the actual values. This represents significant revenue losses for the state.

Recently, the sector has become increasingly industrialised with the arrival of multinationals to invest in it. Thus, five companies were approved for geological and mining research work at the end of June 2019. These are Ntega Holding, for coltan and associated minerals (Runyankezi); Tanganyika Gold, for gold and associated ores (Mabayi); RainBow, for rare earth ores (Gakara); African Mining, for gold and associated minerals (Muhwazi) and CVMR, for Nickel and vanadium (Nyabikere, Waga and Mukanda).

In relation to industrial mining, five agreements have been signed between Burundi and the following companies: Comptoirs miniers des exploitations minières du Burundi (COMEBU); Burundi Musongati Mining (BMM); Tanganyika Gold Mining Burundi (TMB); Rainbow Mining Burundi (RBM); and African Mining Burundi.

The conventions between Burundi and the mining companies are drawn up in accordance with the model convention contained in the Mining Regulations. This model convention is inspired by the World Bank Model Mining Convention. Any draft convention is first examined by the government. For the draft convention to be signed it is scrutinised beforehand and then adopted by the Council of Ministers. All of this works to constitute a guarantee of balance and of mutual benefits sought, since the convention gets to analysed by various departments to varying levels. Therefore, mining in Burundi is governed by the mining code which was put in place by law No. 1/21 of 15 October 2013. The tax regime established by this law is characterized by a sharp increase in taxes and mining fees compared to the 1976 mining code and the creation of new taxes.

This mining code is supplemented by Decree No. 100/19 of 16 June 2015 on the Burundi Mining Regulations which sets the conditions and modalities of application. The mining tax regime applies to all operators of the mining and quarrying sector in Burundi and to all prospecting operations, industrial and artisanal exploration research, and quarry products. However, the code and the mining regulations have been seriously criticized by independent or internal observers including some government representatives in the said joint businesses.

Prof. Steve de Cliff’ comment on tweet following the Government’s measure to suspend mining contracts with Rainbow Mining Burundi involved in rare earths exploitation.

For example, in 2018, Prof. Steve Decliff (professor of chemistry at the University of Burundi),  the State representatives on the Board of Directors in the rare earths mining company Rainbow Mining Burundi made the following remark -before being fired from this capacity -in what he called “secrets behind the exploitation of rare earth deposits of Gakara in Burundi”, from it:

“For those who do not know it, the name ‘rare earth’ is given to a group of 17 strategic metals including the 15 of the rows of lanthanides on the periodic table, to which we add scandium and yttrium. There is no doubt that the rare earths deposits at Gakara in Burundi is of exceptional quality. The rare earth veins are in atypical grades that do not exist anywhere in the world. Levels range from 47% to 67%, with an average grade of 55%.

By comparison, the other largest mine in terms of grade is the Steenkampskraal rare earth mine in South Africa, but its average grade is only 14.4%. The other rare earth mines that exist elsewhere in the world have grades that rarely exceed 5%. This is the case of Chinese rare earth mines, which occupy the third place in terms of deposits.

The rare earths exploitation of Gakara is carried out via a joint company, Rainbow Mining Burundi (RMB sm) developed under a mining title which grants to Rainbow Rare Earths (based in London) 90% of the shareholding, and only 10% to the Burundian State. But what the public does not know is that the Rare Earths plant in Kabezi (rural Bujumbura) does not produce ‘rare earth metals’ as such, but rather so-called rare earth concentrates.

To extract the rare earth metals, the company must transport its cargo of ‘concentrates’ to a hitherto secret destination, with another intermediary, ThyssenKrupp, a financial multinational based in Germany. The problem is that in calculating the dividends that accrue to each of the two shareholders, Rainbow Rare Earths claims that the process of separating rare earth concentrates into its metals costs 71% of the real value of these highly strategic metals.

The Burundian Government, which has (remember) only 10% as shares against 90% of Rainbow Rare Earths, sees its shares reduced to 2.9%. That’s not all. From this fraction, we must also deduct recurring costs (such as consultancy and travel experts RRE), which amount to several billion Burundian francs per year. After the final count, for USD 100 of rare earth sold, it’s not USD 2.9 that will land in state coffers, but barely USD 1 or maybe less, or even nothing at all if there is ‘interception by some local eaters’. There are some solutions that all converge in the need to build a rare earth separation plant in Burundi. Perhaps jointly with one or other African countries that have these strategic deposits.” (Author translation).

Oddly enough, huge sums of money in this sector escape the tax net. As announced by the spokesperson for the Burundi Revenue Office (OBR), during an information workshop for Burundi miners on 16^th February 2021[3], OBR expected to collect more than USD 5 billion, but the amount received is not even half of that expected. However, UN experts on the DRC reveal that Burundi sold 2,000 kg of gold in 2020 when only 500 kg was recorded in the OBR’s books.[4]  

It is probably against the above-mentioned background in the mining sector that the Prime Minister Alain Guillaume Bunyoni announced, that Burundi is looking into suspending some contracts with the mining companies. Stating this before parliament, while presenting the government’s mid-term report this year, Premier Bunyoni indicated this as a point of consideration since the country is not benefiting from the contracts.

Globally, Africa loses a lot of capital in illicit financial flows annually. Among this capital that leaves the African continent each year, false invoicing of exports represents USD 30 to 52 billion, mainly linked to gold smuggling. This represents 77% of the under-invoicing of mineral exports in Africa followed by diamond (12%) and platinum (6%).[5]

In Burundi, if OBR were able to track and recover this money to return it to the public treasury, it could be used to cope with the consequences already engendered by the coronavirus pandemic. For instance, the lost USD 2.5 million, once recovered, can pay 1,041 medical doctors annually.

Appolinaire Nishirimbere is a tax justice campaigner in Burundi and co-founder of “Initiative citoyenne pour l’environnement et le développement durable (ICED). Email : appotjna@gmail.com, Phone: +257 75 938 450.

END NOTES

[1] http://www.presidence.gov.bi/wp-content/uploads/2018/08/PND-Burundi-2018-2027-Version-Finale.pdf

[2]https://www.globaltaxjustice.org/sites/default/files/Exploitations%20minieres%20et%20gouvernance%20des%20ressources%20naturelles-Etude%20-Actionaid%20Burundi.pdf    – French

[3] https://obr.bi/index.php/en/actualites/1354-l-obr-sensibilise-les-exploitants-des-carrieres-et-mines-sur-leurs-devoirs-fiscaux  – French

[4] https://www.radiyoyacuvoa.com/a/obr-amakori-y-ubutare-n-inzahabu-ntagera-mu-kigega-c-uburundi/5784877.html     – Kirundi

[5]https://www.dw.com/fr/pour-tout-lor-de-lafrique/a-55979508  c (French)

By

Tom Odhiambo

Title: FY 2021-2022 The Mwananchi Guide Budget Highlights;

Publisher: Government of Kenya (GOK); Authors: Ministry of Finance, National Treasury and Planning; Publication Date: June 2021; Pages: 12.

The government of Kenya’s estimated budget for the Financial Year 2021/2022 is still very fresh. Keen readers of the budget, the women and men who comb it looking for opportunities to exploit, are still hard at work flipping through the pages.

For the general reader, the summaries offered in the newspapers is the only source of information they have.

However, the law actually anticipates that the government will publicize the budget for all Kenyans to be able to see how the government plans to raise revenues as well as spend it. Why is it important that ordinary citizens know about government revenues and expenditure?

Obviously because they are affected as taxpayers. And taxes form a significant percentage of government revenue, especially in poor countries, such as Kenya.

For instance, according to the estimates for the FY 2021/2022, of the expected revenue of Ksh. 2,038.6 billion, the government plans to raise 40.9% of the amount from Income Tax. Value Added Tax will add another 23.2%; Import Duty 5.8%; Excise Duty 11.8%; and Other Taxes 5.3%.

Yes, taxation will, therefore, eat a huge chunk of any money a Kenyan will earn and or spend!

So, there is this little 12-page insert in today’s (30 June 2021) newspapers, declaring itself as ‘The “Mwananchi” Guide. Guide to what? Guide to a discussion of a budget that has already been read? Guide to how much more painful it is going to be for that mwananchi to pay for the government’s profligacy?

Guide to a debate on the ‘Summary of Proposed Tax Measures?’ Guide to the poor PR on ‘Big Four’ Agenda, which proclaims ‘A Conducive Business Environment for Investment’, and talks about ‘Improving National Security? What is it about ‘improving national security?

Apparently the ‘second mass registration for Huduma number’ – that magic state-issued card that would open doors to all government services – will cost the taxpayer Ksh. 1.0 billion! Remember that the Huduma Number cards are yet to be universally issued, more than a year since millions of Kenyans registered for it.

Undoubtedly the budget-making process should involve all taxpayers, or their representatives. Indeed, sessions are often held in most parts of the country to solicit views about what the local and national budgets should consider as priority areas to fund, as well as to talk about the tax burden for taxpayers.

However, if, for instance, an ordinary Kenyan reads that the government proposed in its estimates that it will spend “Ksh. 670.0 million for Digital Literacy Programme”, also known as the ‘School Laptop Project’, when evidence on the ground shows that most pupils in government schools have hardly seen a laptop, then one wonders if Kenyans shouldn’t really spend more time talking about how the government uses its revenue.

Why should the government of Kenya, which really has little capacity to establish a nuclear reactor set aside “Ksh. 1.3 billion for development of nuclear energy and exploration and mining of coal? Sure enough, coal is a source of energy. But it is dirty energy.

Why would any government that wishes to be a leader in environmental conservation ever imagine spending money on mining coal or even investing it in nuclear energy? Probably the more urgent question is: will these monies really be used for the planned projects?

Shouldn’t Kenyans be worried that this budget runs on a deficit? Which parent would buy her family gifts every day or take them on holiday every month or feed them meat at every meal, when she knows that her salary cannot pay for half of the debts she is incurring?

Why would the government of Kenya run a budget deficit of nearly a third of the budget estimates? Who would run a household budget on debts every day, every week, every month, for a year? It isn’t just feasible. It is morally unacceptable.

But this is exactly what the government of Kenya has planned to do with its budget for the FY 2021/2022. It simply means that in the course of the financial year, the government has to play magic tricks, moving monies from one allocation to the next, in cases where the anticipated borrowing from the local market and funding from donors doesn’t work out.

It also means that Kenyans have been mortgaged not just to foreign funders (creditors) but that they are at the mercy of local banks, on which the government will depend for domestic financing. In such a case, can the government really police these banks?

Why should Kenyans always discuss the estimated government budget? Because although it may appear to be just a government affair, it is quite close to home. In one way or another, all Kenyans will and do pay taxes.

Taxes come in many forms. It could be a charge for applying for a government document. Selling some produce from one’s farm is taxed. More than half the cost of a beer is tax. Part of the cost of that boda boda ride is tax. There is tax everywhere, most of it not differentiating between the rich and the poor.

This is why every Kenyan – or citizen of East Africa – should be concerned when the Minister for Finance carries that little briefcase into parliament, ready to read his or her estimates for the annual budget.

Taxpayer education should not just be an occasional call by the receiver of revenue, exhorting taxpayers to do their civic duty and pay their dues. It should be a continuing process of educating citizens on the how, why, and what of the budget process.

Citizens should learn and understand how budgets are estimated; why these estimates differ from one year to the next, and from one sector to the other; and what are the implications of the estimates for the collectors of revenue, payers of tax and expenditure.

‘The “Mwananchi” Guide from the National Treasury and Planning in its abbreviated form does not really even begin to explain to the ordinary citizens, who will bear the brunt of the government’s extravagant spending based on such a huge budgetary deficit, why they should be interested in why the government expects them to pay taxes and how it uses the collected revenue.

Tom Odhiambo teaches at the University of Nairobi. He can be reached at: tom.odhiambo@uonbi.ac.ke or +254720009155