Why is there a lack of parliamentary participation in African double taxation agreements?

By

Everlyn Muendo and Leonard Wanyama

The recent nullification of Double Taxation Agreements (DTAs) by several African governments has been a ground-breaking moment in tax justice advocacy, revenue debates and pursuits of economic justice in general.

DTAs are pacts which divide taxing rights between two or more states on cross border income and are sometimes interchangeably referred to as Double Taxation Treaties (DTTs).

Kenya, Senegal and Zambia each cancelled their respective DTAs with Mauritius. This was based on the realisation that in one way or another their state interests were infringed upon by how their respective agreements took away their taxing rights.

This undermined public finance management (PFM) principles, affected domestic resource mobilisation (DRM) capabilities and enabled the facilitation of increased illicit financial flows (IFFs).

For instance, in Senegal the government lost up to USD 8.8 billion due to tax avoidance by major mining companies such as Grande Corte Operations and SNC Lavalin. This was possible thanks to the two entities setting up shell companies in Mauritius in order to take advantage of loopholes in the Senegal-Mauritius DTA.

Such progressive steps by governments have been lauded as a step in the right direction. However, even while these actions are celebrated, the lack of legislative involvement in the policy process of formulating DTAs in the respective countries and beyond is noted as a worrying trend.

This is deeply concerning because parliament is the representation arm of government comprising directly elected officials, primarily vested with the power of the people in protecting public interests.

It is therefore wrong to not include them in such important procedures of formulating DTAs. Why then are parliaments marginalized from these processes and how is this exclusion from treaty making taking place?

A game of synonyms -The Danger of DTAs not being qualified as ‘Treaties’

In order to understand what is limiting parliamentary participation in treaty making, it is important to know how DTAs are defined. According to the Vienna Convention on the Law of Treaties (VCLT), a treaty is an:

 ‘’international agreement concluded between States in written form and governed by international law, whether embodied in a single instrument or in two or more related instruments and whatever its particular designation.’’

This definition is considered as the standard governing best practices in relation to binding international treaties. Obviously, DTAs are treaties if one simply bears in mind that they are agreements between two or more states, are in written form, and are governed by international law.

This understanding has been adopted verbatim in the laws of Kenya and Zambia, specifically those guiding processes of treaty formulation. However, both countries have added a qualifier to this definition as to why bilateral agreements should not be considered treaties. This creates a game of synonyms that makes an unclear discrepancy in the law.

For instance, in the Kenyan case, bilateral agreements do not qualify as treaties because they are pacts between two states that are mainly concerned with administrative matters. This is as opposed to treaties which are pacts on issues of higher significance such as sovereignty or human rights.

This distinction is mischievous because it goes against international best practice. Logically, any international commitment requires accompanying technical directions that help in achieving its consequential aims.

Separating the meaning of agreements from treaties is an attempt to frustrate dispute resolution processes in which the VCLT definition is always used with regards to the interpretation of rules regarding the implementation of international treaties. 

Essentially, the rule of thumb as per VCLT, requires reference to the context (legal or otherwise) of the treaty in question to gain the true (negative or positive) impact of a DTA. This is in order to determine the managerial instructions of implementation based on provisions within it.

In further examining the interpretation of DTAs this means authorities need to refer to available models and their respective commentaries. This will often be done through utilising either the Organisation for Economic Co-operation and Development (OECD) model, the United Nations (UN) model or the African Tax Administration Forum (ATAF) model.

Besides general concerns in relation to double taxation, the UN model is designed to include broader considerations from developing nations. Meanwhile the ATAF model is more specific in taking up the concerns of African countries in order to offer more favourable interpretations for their use.

This is supposed to ease the process of interpreting technical issues by domestic authorities. In the Kenya- Mauritius DTA case, this would have been a useful approach in determining the petition that challenged the constitutionality of the treaty, and, in addressing substantive issues raised.

Further, this would have made it easier for the court to understand or examine technical issues of the DTA in view of the allegations that the treaty was likely to result in significant revenue leakages for Kenya. Ultimately, in making this distinction between treaties and agreements, this game of synonyms is dangerous because it limits the interpretation or technical understanding of content within DTAs.

It is also detrimental because it could result in future court or tribunal decisions that may effectively reduce the taxation rights of the government, thereby resulting in lost revenues and the institutionalisation of tax injustice or inequality.

Lastly, by failing to consider DTAs as treaties and thereby acknowledging whether they are full legal instruments or subsidiary legislation, such interpretations weaken parliamentary participation or procedures in DTA treaty making.

Legal Practice that Weakens Parliamentary Participation

Surprisingly, parliaments pass the very laws that weaken their participation in DTA policy formulation processes. This is especially the case in relation to treaty making laws.

In the East African Community (EAC), these include Kenya’s Treaty Making and Ratification Act of 2012 as well as Uganda’s Ratification of Treaties Act of 1998. Meanwhile Zambia’s Ratification of International Agreements Act of 2016 can be cited as another problematic law.

These laws establish the process of how governments enter into any agreements with other states and they also play an important role of indicating the means of domesticating these international treaties through the process of ratification.

Ratification enables international agreements to have the force of law within a country because it shows the willingness of a government to be bound by a treaty. Such official endorsement is normally achieved through the approval of either the cabinet, parliament and or a combination of these two state organs.

In Kenya and Zambia, the law requires that the Cabinet approves a treaty after which it is passed on to the parliament for consideration then ratification.

After attaining this legislative consent, an instrument of ratification is made and deposited with a relevant international authority or state. A copy of this is then sent to the Registrar of Treaties and included in the list of official agreements the country subscribes to.

This required procedure shows a clear process for parliamentary participation in treaty making. It is necessary so that legislators can effectively protect public interest and, as in the Kenyan context, specifically ensure that these treaties do not conflict with the Constitution. Yet in many African countries, DTAs are not being subjected to this standard of legislative scrutiny.

This is because the additional clarification in treaty making laws, distinguishing DTAs as bilateral agreements, legally lowers their hierarchical significance thereby reducing their parliamentary relevance.

Basically, the game of synonyms weakens the legislative role at a crucial stage of oversighting the domestication of international obligations because ratification of DTAs is not viewed as a significant issue in the massive schedule of parliamentary business. 

While the Executive, through the agency of Cabinet, can enter into bilateral agreements on behalf of the people of Kenya, parliament remains supreme in determining affairs in relation to PFM especially because matters of taxation and other resources are a question of national sovereignty.

Executive Overreach through Statutory Instruments

Unfortunately, in both the Kenyan and Zambian context the executive can enter DTAs through extensive powers given to it by income tax legislation. This widespread influence amounts to overreach since the agreements are then not subjected to effective public scrutiny from parliament as all treaties should.  

Moreover, practice shows that when the executive arm enters DTAs they are subsequently relegated to subsidiary legislation, that is, laws made by a body other than the parliament. This happens because parliament uses statutory instruments to delegate such authority to institutions of government like ministries, departments or agencies and their respective high ranking decision making officers.

According to the Parliament of Kenya, The National Assembly Fact Sheet No.21 on Statutory Instruments this form of delegated authority can be described as:

Any rule, order, regulation, direction, form, tariff of costs or fees, letters patent, commission, warrant, proclamation, by-law, resolution, guideline or other statutory instrument issued, made or established in execution of a power conferred by or under an Act of Parliament under which, that statutory instrument or subsidiary legislation is expressly authorized to be issued.

Generally, it is therefore expected that once these powers are granted and implemented within stipulations of the law then there would be no need for extensive parliamentary input. Therefore, DTAs get less scrutiny as subsidiary legislation through their description of being ‘simple’ agreements.

Regrettably, the reality of subsidiary legislation is that government bodies or officers who are delegated authority through statutory instruments tend to overreach and claim powers they do not possess or outrightly abuse them.

This then results in processes that harm the level of public participation and scrutiny required by limiting conformity to the constitution plus subsequent legislation such as the Interpretation and General Provisions Act, the parent law from which delegated authority is drawn, all the way to the Statutory Instrument Act itself.

With exact regard to the Statutory Instrument Act, this procedural sidestep undermines its standards of delegated authority that require consultation with stakeholders, preparation of regulatory impact statements and explanatory memorandum, plus tabling of issues in parliament; especially on issues that have revenue implications.

This means that by failing to consider DTAs as treaties, they are -by technical means- driven to a lower legislative hierarchy, where due to poor practise tax issues are subjected to subordinate examination by parliament thereby dangerously limiting the rights of government to collect the required resources that help in the provision of public goods and services.

Need for Parliamentary Action in the Fight for Tax Justice

Such failures essentially derail the fiscal sovereignty of states by not properly exercising taxing rights. DRM efforts are then undermined resulting in wider development ramifications on the socio-economic needs of citizens due to lowered taxation that affects revenue allocation and expenditure capacity.

African parliaments need to take up a stronger role as far as DTA matters are concerned. This can be done in two ways. First, is by utilising their powers as captured in ratification laws to change treaty formulation processes.  

Treaty making laws need to reflect that DTAs are a serious issue of fiscal sovereignty for the state because they are fundamentally obligatory treaties like any other and are therefore not a lower form of legal designation.

Secondly, African parliaments need to increase their oversight on the affairs of Cabinet and any other body involved in the formulation of DTAs. For instance, this could be through insisting on public availability of revenue data used for executive decision making in entering DTAs. Such an examination can become a means of further scrutinizing various legislations that suspend any aspect of income tax law. The authors of this article work for EATGN. Contact Email: info@eataxgovernance.net

(PHOTO CREDITS: Courtesy TJAU)

In the July-September 2020 edition, we bring you some of the key milestones that have been made by the Local Government Finance Commission (LGFC) in local revenue mobilization. Among other objectives, the LGFC was created to advise the president on all matters concerning the distribution of revenue between the Government and local Governments and the allocation to each local Government of money out of the consolidated fund.

The issue also presents some of the TJAU partners at the sub-national level from Teso, Central and West Nile regions sharing their experiences. These partners have been able to contribute greatly to advocacy work within their respective communities.

Below are some of the key stories presented in this newsletter;
• A Local Government Finance Commission (LGFC) Perspective on Local Revenue Mobilization in Uganda
• Residents of Asuret Sub-County actively monitor delivery of public services in their Community
• Asuret Sub County realizes lower revenues in the wake of COVID-19.
• Koboko community residents devise measures to improve local revenue
mobilisation in the district
• Weaker service delivery in Kyere Sub County owing to creation of new
administrative units
• Kalamba Community Development Organization engages Local Government officials from Mpigi – Butambala District on Local Revenue Mobilization.

(PHOTO CREDITS: Courtesy Citizen Tv)

By

Tom Odhiambo

There is no doubt that the global economy is in recession. In many parts of the world businesses have ground to a halt. The production of goods has slowed down. The services sector is probably worse off than the manufacturing sector. Goods and services often go together.

Bread, milk and tea in a hotel means that a cook, a waiter, a cashier, a cleaner and the supply chain to bring the three commodities to the hotel as well as the transport sector to ferry the workers are financially oiled.

In the short run, millions of workers have lost jobs and livelihoods. In Kenya, the latest government figures only go back to June when it was reported that about 1.7 million Kenyans had lost their jobs from March to mid the year. What will happen in the long run as the recession cuts across the economy is anyone’s guess.

This is why news that the government plans to introduce a 1% tax burden on employed Kenyans is not good news. The proposed taxation is aimed at creating an unemployment insurance fund (UIF), which would be used to offer short term relief to individuals who lose their jobs in times such as these.

The government proposes that the workers will be deducted 1% of their income, with the employer marching it with another 1%.

In the end the employee will pay 2% of her income, considering that most employers will simply pass on the 1% tax onto the employee through a range of mechanisms – lower salary, less benefits, layoffs etc.

Although the idea is sensible, the timing is plain wrong. These are times when business have shut down, or are working at half their capacity, or have laid off staff, or have halved their staff pay, among other measures.

Businesses are strained because they aren’t making money and will naturally struggle to pay taxes. The tax burden for most businesses and individuals has risen significantly.

Working Kenyans generally support a whole set of dependants. There are immediate relatives, then distant kin, friends, colleagues, among others. This is one of those ‘hidden’ expenses that make the life of an ordinary working Kenyan economically nightmarish.

Considering that there is always little chance of one having more than one job – despite the popular claims of a ‘side hustle’ – many Kenyans relying on wages tend to live hand-to-mouth. It is a daily struggle to make ends meet.

In many cases the pay doesn’t meet the basic needs of many a family. Can such individuals afford another tax when they are already overburdened by taxes, formal and informal?

Would employers willingly pay such tax and not retrench more workers? Where did the government get such an idea at such a time? And why are Kenyans not so concerned about the proposal?

It is important to question the value of this suggested tax because the conditions under which it is likely to be introduced aren’t just right. There is need to debate the proposal because no one today knows for sure for how long COVID-19 is going to be around and to continue affecting businesses.

Is this suggestion for the long run or is this some short term measure that will be ended as soon as it is clear that we can operate ‘normally’?

How do the working Kenyans who will contribute to the fund ensure that this is not another milk cow for the politically connected or a source of income for supporters of particular government functionaries? In what specific ways will a retired contributor benefit?

Not many would oppose a fund that cushions those who lose their jobs in moments such as these. For technological and business changes these days no longer guarantee employees the old from cradle to grave.

Very few jobs offer the opportunity to work for one’s entire productive years. And even where one can work till retirement, there is always the worry about retirement.

In fact, too many governments are struggling with their pensions – there aren’t just enough people working to support retirees, or, pension funds can’t find productive and secure investment opportunities.

This means that workers are increasingly being expected to save for their time away from the workplace.

In such circumstance every shilling counts. Every little saving by a Kenyan worker will surely cover them for a rainy day. In this country, where retired Kenyans always have to fight to receive their pension, any money that they can save whilst working – and possibly invest – is worth keeping.

Apart from saving whatever little money they earn or have; many Kenyans don’t live far from pecuniary embarrassment. For some of them, the end of the month – when they receive their pay – can be a difficult period as creditors come calling yet they cannot pay off all their debts.

How do you convince such an economically struggling person to pay more taxes?

The writer teaches at the University of Nairobi. He can be contacted at: odhiambotom@gmail.com or +254720009155

By

Tom Odhiambo

Title: Tax and Development – A Comparative Study; Editor: Karen B. Brown; Publisher: Springer International Publishing; Date: 2017; Pages: 377

In general discussion taxation is only related to development directly.

Common discourse tends to project the impact of taxation and taxes on development as the resultant financial investment, in goods and services, that impact the quality of human life.

In other words, money collected should be seen and felt to have been invested in public goods that people benefit from directly.

Except for the experts. who know the various ways in which taxation directly and indirectly impact development, ordinary citizens would be lost if asked to explain the different ways in which tax policies or practices determine local development.

Yet, taxation regimes have both a direct and an indirect influence on the development of society(ies). Double taxation denies the taxpayer extra money which could easily have been invested in some business.

Tax holidays for investors (local or foreign) could enable a business save money and reinvest in machinery or business plants. Specific tax exemptions may allow individuals or businesses to save and use the money to expand the business or improve the existing one.

Indeed, tax policies within a country, tax agreement between nations, and taxation practices across a region or the world have direct and indirect effect on development, especially in African nations, which are industrializing.

African countries, many with weak economies and even weaker tax regimes, are likely to find themselves disadvantaged in relation to the developed nations.

The developing nations, for instance, enter into trade agreements that compel them to buy goods from the developed countries, which goods are often subsidized, and which consequently disadvantage local manufacturers.

Undoubtedly this is an unfair economic practice. But what would a weaker African partner do when a stronger, industrialized partner dumps goods into their market, which cannot be taxed at the same rate as local goods?

In many instances nothing really. This is why tax justice advocates, non-governmental organizations opposed to harmful tax practices, and organizations such as the United Nations have always sought to debate, encourage and institutionalize fair tax practices internationally.

This is not an easy task, as many of the essays in the book, Taxation and Development: A Comparative Study (2017) show.

In Taxation and Development various authors, drawn from different countries across the world such as Australia, Belgium, Croatia, Israel, South Africa, Uganda, USA and Venezuela, discuss their countries’ experiences and how policies have impacted their development.

The conversations revolve around various internal tax practices such as incentives for taxpayers in a direct tax system; and international tax agreements to reduce the burden of tax for direct foreign investors.

Further issues include local and international laws that can protect those investing abroad against unfair tax practices; taxation policies that would encourage locals to compete with foreign investors; and taxation on cross-border incomes.

Lastly, the book also looks at how to tax investments in tax havens by locals among other topics.

The essays in this book deal with the specificities of each country but within the broader global context since it is no longer tenable to think and act about tax and taxation simply within one’s borders.

What happens across country boarders have a substantial impact, especially because of cross-border movements persons, services, goods, or transfer of funds.

Therefore, a book like Taxation and Development is significant for African countries because they are more disadvantaged than their counterparts in the global north and Asia, yet international trade today puts them in the same basket.

What policies should African countries institute and implement in fostering development within individual nations, regionally and continentally?

Can African countries ever truly benefit from international tax regimes, which are generally largely designed to address the needs of the more developed nations? In other words, can there be fairer tax regimes and practices that can help African countries develop?

The essays in Taxation and Development seem to suggest that there is a way in which each country in the world could benefit from collectively designed taxation policies and practices.

This is the ideal situation. In this case, for example, Kenya can indeed trade fairly with the UK, its major European trade partner, without fear that Kenya’s goods are overtaxed in the UK and that the UK is probably subsidizing its manufacturers who sell in Kenya.

Indeed, the UK could even suggest that in order to reduce the cost of production and transportation, it will invest in a factory in Kenya.

Kenyans will be sold the idea that the factory means transfer of technology, knowledge and skills, and that the locals will buy what is made in Kenya. But would such an idyllic situation happen?

Evidence shows that in situations such as the one described above, there is actually little, if any, transfer of technology and skills.

The industry in question could easily (and often do) underdeclare its profits hence paying less tax, thereby transferring (taxable) income out of the country in the form of payment for services or benefits for its employees and so on.

If Kenya were to get into a dispute with the UK, it would be a net loser as the factory could close, the staff would leave, and the country could be declared hostile or unfair to foreign investors.

This is the paradox of multinationals – very few multinationals would willingly pay the correct taxes in the countries where they are located.

Thus, although the wish to have a fairer international tax system is fine, it is nearly impossible to convince countries to wholly sign up to treaties that would force them to implement tax regimes that they may find, from time to time, constraining.

Each country tries as much as it can to raise taxes to pay for its needs.

Therefore, even though a country may share information on taxation; provide tax incentives for foreign and local investors; sign up to bilateral and multilateral investment agreements; institute anti-tax haven provisions, among other measures, each country’s needs will always determine how willing and often it will subscribe to such international policies or practices.

In other words, realism trumps idealism where taxes and taxation are concerned.

Every country in the world wishes for a better life for its citizens. This may be expressed in its policies on development. But progress always has a cost, which can never be paid for by foreign investment or foreign aid or benign foreign tax policies.

Taxation and Development shows that indeed there are taxation policies and practices that can enable progress and enable people to live a decent life across the world. Many countries have developed by establishing such practices.

But the realities of globalization and financialization of economies mean that many countries will always be struggling to keep up with innovations in doing business, which means that taxation increasingly becomes complicated.

Also, for selfish reasons, just like businesses undercut each other, countries will always strive to make themselves attractive to investors and businesses by offering tax incentives that would undoubtedly undermine international agreements.

It is often very difficult to challenge such actions, for the politicians and bureaucrats in charge will counter-argue that they are doing what best serves the interests of their citizens.

In the end, therefore, what Taxation and Development seeks to provoke is a continuing debate on how to create conditions that would enable fair global taxation regimes and practices that may help each country to develop according to its ability and offer humanity decent life.

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

By

Tom Odhiambo

Title: Corrupt Histories; Editors: Emmanuel Kreike and William Chester Jordan; Publisher: University of Rochester Press – Studies in Comparative History; Date: December 2004; Pages: 498

It is a given today that every human being pays tax in one form or another. It may be immediate or deferred; direct or indirect; voluntary or involuntary etc.

Tax is part and parcel of human life because it is in many places the primary source of revenue for governing authorities, with which they provide public goods and services. Public roads, schools, hospitals, security, medicine etc. should be and are often paid for by taxes.

History shows, however, that it is not often easy to collect taxes. Not all citizens find it agreeable to pay taxes. Many deliberately avoid paying taxes or only pay partially.

Why would people who benefit from goods and services paid for by their taxes refuse to or only pay a part of what they owe the ‘public purse’?

There are many answers to this question. But one of the most cited is corruption. What do we mean by corruption? There are almost as many definitions of corruption as the number of individuals who try to define it.

Yet this amorphous word is still used to describe behavior that serves the interest of the individual when they handle public resources. A government officer who uses an official car for personal errands is deemed to be corrupt.

A public office holder who seeks a bribe or an inducement in order to render services for which she is officially paid is said to be corrupt. An individual who solicits extra payment – where expected payment is already made – so as to perform their duties is seen as corrupt.

The monies extorted from members of the public seeking public goods and services is an added tax, only that in this case the revenues don’t reach the common purse but go into the pockets of individuals.

Public service or state offices, even though they are established on behalf of the general populace and are paid for from a common purse tend to be some of the most corrupt places in many societies.

They are generally rated corrupt by several institutions that research and produce an index of the levels of corruption, locally or globally.

The police service, for instance, is always fingered in many countries in the world, as corrupt – by which it is generally suggested that police officers seek bribes or even extort payment above the officially stated fee for services sought by members of the public.

But is this a recent phenomenon? Scholars suggest that there is enough evidence to show that such practices have always existed in history.

In Corrupt Histories (edited by Emmanuel Kreike and William Chester Jordan) several authors write about the nature, causes, and consequences of corrupt practices throughout history.

The authors note that in some state jurisdictions, government agents would levy taxes, from which they were expected to deduct the cost of their services and remit the rest to the central state.

Such a system relied on the willingness and honesty of the said individual to not levy more than expected taxes (and so avoid restlessness by the citizens, and probable resistance), and also send to the government its due.

As would most likely be expected when an individual is given such powers, some would not follow the law; they would instead bend it to serve their interests.

In an essay, ‘Officials and Money in Late Imperial China: State Finances, Private Expectations, and the Problem of Corruption in a Challenging Environment’, Pierre-Etienne Will, shows how the individual appointed by the state to administer a region, and also collect taxes, may be overwhelmed by the conditions under which they work and exceed the specific functions of their office.

The story goes like this: the state sends a civil servant to administer a region. It expects him to perform all the functions that come with the ‘office’, including behaving in a manner that befits the office – being a man of dignity.

The author summarizes the problem this way:

“What makes the Chinese case particularly interesting to the study is that the very notion – usually thought of as a modern one – of a civil servant getting paid a salary that is supposed to make him self-supporting and independent, and hence able to operate and yet ‘not take one cent from the populace’ for whose sake he is expected to mobilize all his energies in a devoted and impartial way, was very much present in the Chinese discourse.”

The Chinese state would often not bother as its officials, spread in the countryside, far away from the ruling center, charged extra fees in order to raise enough money for their services and upkeep.

In many cases, the tax collector was the accounting authority, and the head office had little or no control over him. Many of these officers in the far corners of the country could not raise enough money from local levies to pay for the cost of the bureaucracy they were running.

Historically, civil service salaries have always tended to be poor compared to remuneration in the private sector.

Civil servants are generally paid lowly yet expected to maintain social status that reflects their high office – live well, dress well, have domestic servants, have means of transport, employ subordinate staff, progress socially etc – as well as the seriousness of the very office of the state that they represent.

How have civil servants dealt with the contradiction of low or poor pay and the need to project the dignity and seriousness of their office?

History shows, as the essay we cite above notes, that civil servants have been inclined towards levying extra duties on local businesses and populations – either with the express or implied permission of the appointing authority.

It is this extra taxation that makes some bureaucracies appealing. The taxation comes in many forms, all falling under the umbrella corruption. Indeed, the general public simply calls it corruption, be it a police officer extorting from a hapless citizen or even seeking a bribe politely.

It could be direct embezzlement of resources meant for some public project. A local administrator may levy a non-existent fee for some services or adjust the fee and keep the extra money.

In other words, although popular discourse uses the word corruption to refer to these practices, citizens need to begin to understand that this is just another tax, added onto the formal taxes that they pay.

When a passenger pays 10 extra shillings which is passed on to the traffic police officer, that citizens is being taxed, without his or her consent.

When an administrator insists on payment for services that should generally be free, they are introducing a new tax, which doesn’t enter the common pool of public revenue.

All the money collected goes to the administrator’s pocket and those of his seniors who may have encouraged him to levy the fee.

When corruption seems to be an integral part of public office, it is taxation by any other name. And the reason it cannot be wholly eliminated is because it has an osmotic effect – it flows upwards, despite the denials by higher officers.

The bribes or extorted monies collected by the low-level clerk, or the policeman on the beat, or the cess collector, among others, may end up in the individual’s pocket in the immediate. But in the long run it that money is shared upwards in one form or another.

Supposing that the same low-level civil servant faces such extra taxation beyond his workplace, then the cycle repeats itself, sometimes becoming so vicious as to undermine the progress of the society.

This is one of the main reasons why the ordinary citizens need to understand the history and workings of corruption in relation to the tax burden they carry. With knowledge on the debilitating effects of corruption, it is possible to think critically about reforms and remedies in relation to taxation.

The writer teaches at the University of Nairobi. Tom.odhiambo@uonbi.ac.ke. He can also be contacted at 0720009155

By

Tom Odhiambo

Title: The Burden of Produce Cess and Other Market Charges in Kenya; Author: Bayesian Consulting Group Limited; Publisher: Kenya Markets Trust; Language: English; Online: 68 Pages.

Cess is a very old tax. It used to be lied on wealthy members of the society who sought some public services.  As a colonial tax, cess was levied on goods – mainly agricultural produce – supposedly to raise taxes for the local government.

It was assumed that the money collected through cess would be used for local development. The justification for cess in many parts of the Kenyan countryside is that it is to be spent on developing, improving and maintain roads, schools, water, sanitation or health services, among others.

That is the ideal situation or claim. However, where this tax is collected, there is a significant disparity between the promise of the services to be rendered and the services delivered. The evidence is stark for any observer.

A drive to any of the counties that produce raw material, especially farm produce, leads to a barrier across the road. The barrier is generally marked CESS COLLECTION POINT. It is generally manned by individuals who look more like security officers than tax collectors.

But there is actually a tax agent, not so far away. She – they always tend to be women – will have a bunch of receipt books in her hands. One can only guess that the receipts she issues are genuine, and that the money collected goes into the rightful account.

But this isn’t even the issue with cess. The problem with cess is that it is double taxation. In fact, in Kenya cess could be even triple taxation.

Consider this: an individual transporting fresh produce, say sukumawiki from Uasin Gishu County to Vihiga County through Nandi County could easily end up paying cess at three different collection points.

As research by Kenya Markets Trust done in 2016 notes, some counties refuse ‘to accept permits issued by other counties.’

The report, The Burden of Produce Cess and Other Market Charges in Kenya shows, cess adds a significant value to the final cost of the produce to the producer and to the sale price of goods delivered to the market.

To the consumer, cess adds between 5% and 10% to the final cost of the food one consumes. But it is the farmer who suffers most.

The Kenyan farmer suffers a range of costs (formal and informal taxation, if you like) before delivering his produce to the market. Among these include storage, packaging, market levies, loading and offloading, brokerage (the middleman), transport, cess, among others.

Of all these levies, only cess would be deemed beneficial to the producer. The justification for charging the farmer or livestock owner or fisherman this tax is that it will improve services and goods that have a direct effect on the individual’s production.

Thus, there is a good reason to pay it. Or rather, it is not worth avoiding. In any case because it is directly levied, escaping from it isn’t easy.

Yet, evidence on the ground suggests that this is probably an unnecessary tax. It possibly denies the producers extra income that would go a long way in improving their livelihoods.

Roads in agricultural parts of Kenya, cattle dips in livestock rearing regions of the country, landing bays on the shores of Kenya’s lakes, markets, fresh farm produce collection points, health centers in the countryside, schools, among other utilities that should be developed from cess are generally unattended.

In fact, some of the cess collection points are found on such muddy roads that vehicles collecting the tax have no option but to stop and pay.

By the time the farmer or whoever is ferrying the produce to the market pays the levy, they would have travelled through a worse stretch. Nevertheless, cess continues to be collected.

How can farmers, livestock keepers, fishermen etc. deal with this situation where they get taxed supposedly to pay for services and goods which are actually paid for by the central government in most cases?

Can’t the taxpayers agitate for such levy to go into a common pool, which would then be administered locally, with the local community monitoring projects that are funded by such a tax?

Is there a possibility that the local communities themselves could agree on what amount to levy, which could be used to complement what the local or central government collects?

These questions are important to ask because the history of cess collection in Kenyan sits quite uncomfortably with the promised development in the areas where it is collected.

For instance, farmers in highly productive regions of Kenya routinely complain about lack of farmer support services, poor roads, inadequate storage facilities, inaccessible markets, poor prices because of rogue middle men (the middlemen will buy the produce at throwaway prices because it won’t reach the market on time), expensive or poor farm inputs etc.

These complaints tend to show that the cess collected isn’t really spent on the goods and services for which it was primarily meant.

In the end, very hardworking farmers remain poor and dependent on an exploitative farm-to-market chain system that would be eliminated if the cess collected were used correctly. Why retain this tax when it doesn’t really serve its purpose? 

The writer teaches at the University of Nairobi. He can be reached at: tom.odhiambo@uonbi.ac.ke; 0720009155

Mauritius Treaty Network Creates Tax Avoidance Loopholes as a Conduit for Resource Flight

By

Everlyn Muendo

International Financial Centres (IFCs) were previously associated with major global cities such as London, Paris and New York or overseas territories such as the British Virgin Islands. However, this has changed, with the steady rise of IFCs in Africa.

Two IFCs are present in South Africa namely, Cape Town and Johannesburg, with another two being established in the East African Community (EAC) namely, the Nairobi International Financial Centre (NIFC) and the Kigali International Financial Centre (KIFC).

This is not to mention the Mauritius International Financial Centre (MIFC) whose (bad) reputation precedes itself.

Consequently, what are IFCs and how do they relate to Double Taxation Agreements (DTAs)?

The Problem of IFCs in Africa

IFCs may be described as ‘financial free zones’, or areas which are structured to provide financial services to foreigners or non-residents.

They are structured to attract foreign investment through tax incentives, 100% foreign ownership, laws that are distinct and more favourable to foreigners than the non IFC area, full repatriation of profits and a dispute resolution system that is predictable.

Aside from these incentives, IFCs make it very easy for foreigners to set up companies and other such entities, by offering a host of corporate solutions.

These include allowing for the setting up of holding and management companies as well as special purpose vehicles, in order to make procedures as simple as possible by reducing the bureaucracy that is normally involved.

Such characteristics of IFCs are expected to have a positive effect on the flow of foreign investment into a state, particularly if a country is in need of financing for development projects.

However, IFCs can be very harmful to a state’s economy in relation to its domestic revenue mobilisation (DRM) efforts.

This is because the lax regulations and tax incentives that IFCs provide are often used to channel capital out of states with no real intention of initiating real economic activity within countries.

Finances are then whisked away through the IFC for the purpose of avoiding taxes or some other regulation that may be present in capital importing countries or the final destination of the money.

DTAs Create Loopholes

DTAs on the other hand are agreements which are used to decide taxing rights between two states or more on cross border income.

They determine which of the two states will have: the right to tax an entity i.e. a person or company; the circumstances in which those rights apply; and, the extent they shall be able to tax them on an identified income.  

Such treaties normally determine which state has the right to tax based on two things.

First is, whether the economic activity from which that income is derived has been carried out within a state or not. This relationship between where an income is generated and the state is known as the source taxation principle.

Second, is whether the income which is subject to tax has been derived from an entity i.e. an individual or company, residing within a state. This relationship between the entity/taxpayer and the state is known as the residence taxation principle.

DTAs are intended to encourage cross border trade and investment by reducing the risks of being taxed multiple times on the same income.

Nevertheless, there has been wide abuse of DTAs for the sole purpose of aggressively avoiding paying taxes on incomes by taking advantage of the loopholes therein.

This leads to significant loss of revenue for many governments, particularly in developing countries who often sign away most of their taxing rights to developed states in disproportionate DTAs.

A Tax Avoidance Ecosystem

The combination of IFCs and DTAs can be said to the main components of a tax avoidance ‘ecosystem’. IFCs will allow foreign entities to easily register themselves as commercial vehicles within a jurisdiction, enabling them to gain residency status.

As global multinational companies these entities will therefore be able to carry out activities within any state yet take advantage of the DTA facilitation and linkage to IFCs outside their jurisdictions.

While IFCs provide secrecy and DTAs offer lower taxation, an accurate description of cross-border activities needed in determining legitimate revenue gains to be accorded to government will be hidden away from authorities while the resources are whisked away from their reach.

The Mauritius Tax Conduit

Over a decade ago, the MIFC launched its global business sector allowing for the licensing of companies carrying out business outside Mauritius by foreign entities.

These authorizations referred to as global business license 1 (GBL 1) and global business license 2 (GBL 2) allowed companies that were carrying out economic activity outside the country to gain Mauritian residence.

Additionally, as residents they allowed holders of such licenses to derive treaty benefits from Mauritius’ wide DTA treaty network, which is well known for its vast reach, boosting the country’s reputation for being a gateway into Africa.

This dangerous treaty web of the MIFC and its DTA network has led to aggressive tax avoidance and the use of Mauritius as a conduit of Illicit Financial Flows (IFFs).

It has encouraged harmful tax practices such as treaty shopping and roundtripping as has been exposed in the Mauritius Leaks.

Local companies transfer their registration to Mauritius and wire back their capital investments to their respective countries as foreigners to avoid taxes such as capital gains tax and corporate income tax.

This has not gone unnoticed, considering how the MIFC has suffered continuous reputational damage, as seen in the latest Global Financial Centre Index of September 2020.

The index ranks IFCs in order of their competitiveness in five main areas. These include; reputation, business environment, human capital, infrastructure and financial sector development.

Yet again, Mauritius has been ranked among the bottom 15 countries with a poor reputation of an unscrupulous getaway jurisdiction thanks to its financial secrecy, and low taxes that serve as a conduit of resources by corporations dogging their revenue responsibilities.

This means that the overall qualitative character of the MIFC is more in question than its expected quantitative gains such as: the volume of capital it attracts, or its contribution to the economy in terms of GDP.

Developing countries are increasingly cautious of Mauritian DTAs due to the significant negative impact they are likely to have on their revenue collection.

Cosmetic Reform?

In 2018, due to the pressure of the Inclusive Framework on Base Erosion and Profit Shifting (BEPS), the Mauritian government was forced to change the structure of their global business sector.

Further, Mauritian DTAs are being challenged. While its DTA with India was reviewed, in the case of Kenya,  Tax Justice Network Africa (TJNA) – a civil society organization – petitioned the High Court claiming a violation of constitutional principles.

This resulted in the introduction of changes to the law governing the MIFC spearheaded by parliament leading to the abolition of the global business license 2 and strengthening of requirements of substance for holders of global business licenses who are therefore required to meet specified thresholds.

These include hiring a certain number of employees, carry out a specified amount of core income business activity and have their active management or control of an entity within Mauritius before they can be considered as residents worthy of receiving benefits of the country’s DTA network.

Need for Awareness

The Mauritius example, shows the need for greater awareness of the interaction between IFCs and DTAs in order to carefully scrutinise their impact.

With IFCs being set up in Kenya and Rwanda there is a need to carefully weigh their impact on internal DRM efforts and  their trading partners. This is especially the case in relation to vulnerable states with whom they have concluded DTAs with. 

As noted in the 2020 Global Financial Centre Index “We are worried about carefully constructed international taxation agreements designed to ensure fair receipts of tax based on location of earnings being undermined by nationalistic interests, and a naïve political drive simply to lower taxes to attract business…’’

The writer is a final year law student at the University of Nairobi. She can be reached at email: emuendo@taxjusticeafrica.net. Follow her on Twitter @EveKavenge

By

Brenda Osoro

On November 3, 2020, the Tax Justice Network Africa (TJNA) and the East African Tax and Governance Network (EATGN) jointly submitted feedback on the revised Double Taxation Avoidance Agreement (DTAA) between Kenya and Mauritius to the National Assembly Committee for Finance and Planning.

In an unprecedented move, the High Court had declared the previous DTAA unconstitutional in response to a petition by TJNA. The court held that the DTAA lacked approval from the National Assembly, violating the Statutory Instruments Act, 2013, and the Treaty Making and Ratification Act of 2013.

TJNA contended that while the DTAA was invalidated, the court ruling did not delve into the substance of the matter or address the technical issues raised.

The submission aimed to prompt Parliament to fully exercise its powers in scrutinizing the Mauritius treaty, advocating for the people’s benefit and urging the government to align it with Kenya’s development objectives.

Leonard Wanyama, EATGN coordinator, expressed gratitude to the committee for allowing public consultation and presented documents highlighting key technical issues on the Kenya-Mauritius DTAA along with considerations for the parliamentary committee.

During the committee’s discussions, Kitutu Chache MP Jimmy Angwenyi raised a crucial question about the relevance of DTAAs. Executive Director Alvin Mosioma explained that DTAAs offer reassurance to foreign businesses, fostering inward investment. However, expert reports indicated that this specific treaty could encourage multinational enterprises (MNEs) to establish entities in tax havens like Mauritius, enabling treaty shopping and round-tripping in Kenya’s service provision.

This approach could unfairly favor foreign businesses, discourage local enterprises offering similar services, and hinder employment in Kenya. Concerned MPs sought evidence of DTAA abuse and best practice suggestions, with EATGN/TJNA proposing the ATAF treaty model as suitable for African countries.

Responding to these concerns, TJNA/EATGN urged the parliamentary committee to summon the Kenya Revenue Authority (KRA) and request concrete data on the economic gains of the DTAA. They also called for an examination of whether the DTAA violated the principle of tax neutrality and if it followed the ATAF model treaty, most suitable for developing countries.

Lastly, the committee, chaired by Homa Bay Women Representative Hon. Gladys Wanga, commended EATGN/TJNA for raising these issues. The committee pledged to investigate the Treasury, KRA, and other stakeholders involved in the treaty signing, emphasizing the need for transparency and accountability in the process.

By

Tom Odhiambo

Title – Kleptopia: How Dirty Money Is Conquering the World; Author: Tom Burgis; Publisher: Harper 2020; Pages: 464.

The Greek gave the world many words that today seem to acquire very poignant meaning. Kleptocracy is not a word that one hears in everyday conversation. It doesn’t easily appear in pages of essays analyzing politics in what are deemed democratic or even democratizing societies.

But in the recent past it has crept into special reports about countries whose leaders seem unwilling to step down from office, but who have also become quite rich – partly, if not mainly, because of being in that office.

The standard dictionary meaning of Kleptopia is that of a country whose leaders rob the citizen and use the stolen wealth to stay in power, becoming more powerful the more money they have and the longer they stay in office.

How is Kleptopia related to wealth, taxes, and general progress of a society? Why should we bother about the existence of a Kleptocracy anywhere in the world?

If you read Tom Burgis’ new book, Kleptopia: How Dirty Money is Conquering the World (2020) you will understand why we should all be scared that money from openly undemocratic regimes could be funding institutions (including philanthropies), buying up companies and real estate, paying bills for politicians, among such other activities locally.

It could be money from some Euro-Asian country whose name is difficult to pronounce, or a neighboring African country, or some South American Kleptocracy, which arrives in your country as a donation, or an investment by an unnamed foreign investor (read Moneyland) or even holiday spending.

Yet, such money would have left a trail of suffering, political repression, lost jobs and destroyed livelihoods from wherever it came.

The major point that Kleptopia raises is the possibility of the greedy and powerful rulers actually assuming that public wealth belongs to them, to use and abuse as they wish. But what is even more disturbing is the possibility that the rulers may decree that even private wealth shall only remain so as long as the rulers can and do have a share of it.

This is a scary reality. But it is the reality that Burgis discusses, in what is largely a dramatic text, with acts and scenes, set in as varied places as London, Moscow, New York, Harare, Johannesburg, Kinshasa etc.

Burgis shows that indeed the ill-gotten wealth can and does travel all over the wealth, making merry, purchasing property, educating the children of the kleptocrats, but also paying for intimidation, violence and killing of those opposed to the rulers.

In Kleptopia Burgis examines documents; revisits records; interviews countless individuals; tracks the travel of money and wealth; traces opponents of kleptocrats; meets dedicated civil servants who are ready to sacrifice their careers if not lives to ensure that the state is collects what it is owed; focuses on some of the shady characters who make the wheel of money laundering and tax evasion turn; among many other activities, to eventually produce a scary, often sad, but absolutely dramatic rendition of how the world can easily be bled to death by money and power hungry rulers and ruling elite.

But the tragedy that is dramatized in Kleptopia isn’t really about the bad guys in those God-forsaken 3rd world countries. This story isn’t even about African dictators mopping up all the money they could lay their hands on, selling any little natural resources available and buying expensive property in Europe, Asia or America.

The usual African kleptocrats are in the drama of the story. What is scary about this book is that the kleptocrats, from wherever in the world, can engage in their mischief knowing very well that they can stash their loot in the very western countries that preach to them daily about democracy and how to fight corruption.

Where best to buy a company for concealing stolen money than in London. Burgis shows that London (or any other western city for that matter) has enough lawyers, PR companies, banks, wheeler-dealers, financial investors, lobbyists, old politicians, musclemen or even pressmen to help one have his money stay safe, wherever in the world.

London, despite claims to being a beacon of democracy and integrity, has no qualms receiving, keeping, investing and growing stolen money from other parts of the world, Burgis shows. Its ruling class can easily offer services as board members of any organization – even one run by nefarious characters – for a little monetary inducement.

For Burgis, it is the comfort that money – legal but seeking-to-be-hidden money, illicitly acquired money, money from crime networks – can and does find a home in the western world’s major financial cities. That should worry many who seek a just and progressive society.

To those who wish to have the rich show how they make their money and also pay taxes, Burgis suggests that it will take more than hope, investigation, policy and prayer to get them to pay up and open up about their wealth.

Why? Because very few rich people, especially those in power, would allow scrutiny of the sources of their wealth and questions about their tax obligations. The never-ending story of Donald Trump and tax declaration gives a hint to what happens elsewhere in the world. Trump is actually a character in the text.

In Kleptopia: How Dirty Money is Conquering the World Burgis shows how public resources can be sold cheaply to individuals who on the side would agree to share directly or indirectly with government officials or politicians the spoils of the theft.

Drawing examples from one of the former USSR states, traversing Europe, travelling to Asia and Africa, landing in America, Burgis reveals that such ‘stolen’ resources – sometimes really sold to the lowest but connected bidder, thus robbing the selling country of much needed revenue and subsequent taxes – can end up belonging to anyone anywhere.

For instance, a diamond mine in the DRC can end up being traded by officials in the country and those from a neighboring country to a group of ‘foreign investors’ in Europe who may then use it to raise the stock of their company on one of the European stock exchanges.

The African deal may put a lot of money in some African bureaucrat and politician but hardly any revenue into the public purse. Meanwhile, the locals may be killed should they ask questions about such transactions or their environment may be degraded without any chance of compensation.

Many such deals, spread throughout the world and enabled by what we may call ‘travelling capital’, originating from offshore bank accounts and whose profits are kept in tax havens, happen because of the availability of the chain of willing lawyers, PR companies, banks, states that offer tax holidays and tax havens, inactive or complicit government oversight agencies, investment bankers, among other individuals and institutions.

These individuals and institutions are neither convinced by the moral imperative to ask questions about the sources of such money nor worried about bending the law, where and when needed, to make a profit for their clients or enable their money to cross borders and transit from one bank to another.

Burgis is well aware of the consequences of the asking questions; researching kleptopia; writing about the seemingly ‘upright’ public figures who midwife theft of public resources and laundering of such money, and their more sinister accomplices who won’t shy away from breaking legs, kidnapping or killing on orders from the kleptocrats.

He warns that even apparently independent newspapers and media, under threat of litigation, may not publish findings from such investigations.

So, how do we begin to deal with the dangers of kleptopia? It is a difficult question. But Burgis suggests that all who are worried about how the rich and their networks are fleecing society need to take a moral stand. Or even a pragmatic position.

Yes, it is risky to speak about this subject. But speak we must. We must ask questions. We should hold public institutions accountable. We have to make our own little contribution, even when risky, to the fight against kleptopia.

The writer teaches at the University of Nairobi. He can be contacted at: Tom.odhiambo@uonbi.ac.ke; 0720009155

By

Tom Odhiambo

Title: Moneyland: Why Thieves & Crooks Now Rule The World And How To Take It Back; Author: Oliver Bullough; Publisher: Profile Books, 2019; Pages: 304; Language: English

Often when a Kenyan company’s books are in the red, one will read in the newspapers that a ‘foreign’ investor from somewhere in the world – named or unnamed country – is willing to fund it. In most cases the said investor won’t be named. He – it is rarely a she – will wish to remain incognito for many reasons. But it is possible to hypothesize that such investors are really just Kenyans who had moved money out of the country – to avoid scrutiny by tax authorities or to evade taxation – and are willing to bring it back in the name of a ‘foreign’ investor. Such money, hidden somewhere in some tax haven or invested in another country, under a series of companies, is what Oliver Bullough writes about in Moneyland: Why Thieves & Crooks Now Rule the World & How to Take It Back (2019).

Moneyland reads like a thriller novel. Indeed, it isn’t easy to put this book down. For the first page to the last, it is a race – the reader has to run to catch up with the narrator’s details, as they emerge, linking individuals, institutions, companies, countries, crime, business, media, governments, politicians, presidents, lawyers, tax officials, etc in a shocking web of how money started to travel around the world in the post-2nd World War moment to today. Then, the travelling money was real cash, American dollars mostly. Today, money is moved or can be moved across country borders in cash, in gold, in the form of houses, cars, and electronic transfers.

This is a book that is easy to ignore whilst browsing the bookshelves at the local bookstore. Many academics would probably not bother about it, unless they read its review or have heard someone talk about it. Its title may not necessarily attract the attention of a lawyer or a tax justice activist or development expert, or anyone who is interested in how government collects its revenues and how individuals always try to dodge taxes. Indeed, its story begins in a nondescript neighbourhood of London, where one can buy a readymade company, which can be used to hide one’s money and investments etc.

But the real interesting part of the introduction is when the author narrates the real beginnings of the term ‘offshore’. That this word came from radio pirates is in itself a fascinating story. Just like the individuals who bank beyond their countries’ borders because they want to avoid the prying eye of the curious journalist or taxman, the term referred to radio stations broadcasting from ships moored just beyond the boundaries of Britain, but within reach of young audiences who wished to listen to music beyond what BBC offered at the time. This is how Bullough describes the offshore radio stations: “Offshore radio stations were as physically present as any other broadcaster, in that you could easily find their broadcasts on your wireless, yet they were legally absent, and very difficult to deal with.”

That description aptly summarizes ‘Moneyland’, a world where the owners of the banked money don’t exist under their legal identities. Instead, their identity is concealed under an onion-like layer of company after company. In this world very few prying eyes can ever see beyond the second or third layer, if they can survive the sting of the onion – yes, Bullough shows that people have lost their jobs or been killed for trying to look too deeply into the concealment rings that surround companies that are used to keep money in Moneyland.

One of the most important features of Moneyland is ‘shell companies’ – entities that are legal but largely for reasons of hiding the owner of some property or money. Shell companies have been used for decades to hide licit money, so that it may not be taxed or to avoid its confiscation in case the owner is what is described as a politically exposed person; or they are used to ‘clean’ illicit money by way of laundering it through legal acquisition of property, which can in turn be sold and the money banked legally! Bullough writes, “It is not impossible for law enforcement to see through shell companies or to confiscate assets held via corporate vehicles, but it is expensive, laborious and time-consuming, even if you try to cut corners.”

However, shell companies cannot succeed on their own without help from law firms and banks. It is banks that enable offshore banking through transfer of money from one branch to another or through deposit boxes. Bullough shows that banks are willing to bend the rules and practice private banking where ‘no questions’ are asked about high net worth individuals when they open accounts. Such individuals may be politicians or businesspeople who wish to keep their money away from the public or even private eyes of others. In such cases banks can aid money laundering, can enable theft of public assets or money, and can, knowingly or unknowingly aid in sustaining repressive regimes – think of many African dictatorships and try to find out who and where they kept their money.

But offshore banking and the urge by the moneyed to keep away from the taxman and possibly avoid change of government regimes, and also keep as much money as hidden has also spawned what can be called mail order citizenship. With enough dollars one can buy a passport and citizenship or permanent residency in many places in the world today. Today several countries advertise globally, inviting rich people from other countries to invest in elsewhere and become naturalized citizens. In such countries, not many questions will be asked about the sources of one’s wealth, and one can move into their new country to avoid taxes or prosecution, if they had committed crimes.

Moneyland is a world or the rich and superrich. It is the zone for the plutocrats, the men and women who have amassed enough wealth to be able to guarantee themselves and their offspring a very comfortable life. Such individuals, as Bullough shows, are citizens of the ‘world of consumption’, where money is not a problem. Thus, whether in New York, Amsterdam, Beijing, Cape Town, Nairobi or Vancouver, plutocrats are largely identified by their high consumption patterns and the fact that these are individuals whose money is mostly liquid, thus available for them wherever they are. This means that they are not tied to one place, country, or continent. Unfortunately, plutocracy is a world, therefore, whose citizens will happily dodge taxes, launder ill-gotten wealth, and support undemocratic regimes if such regimes serve the interests of the plutocrats.

In an optimistic ending of his narrative, Bullough suggests that something can be done to stop the plutocrats and crooks that steal and bank money well beyond the reach of governments and tax agencies, and are unfairly amassing wealth to the detriment of the many. But as he shows, despite the USA leading the rest of the world in making it difficult for Swiss banks to keep information on their clients hidden, the latest best tax havens are in several American states. Also, the American real estate sector offers very many wealthy people all over the world the opportunity to hide their money. This simply means that the fight to against Moneyland is a tough one.

Which is why Bullough ends Moneyland: Why Thieves & Crooks Now Rule the World & How to Take It Back in a hopeful rather than radical tone, “So what do we as citizens need to do? We need to know who owns what; we need to put crooks in jail; we need to stop our cities from laundering the stolen wealth of the world. And we need to support any politician prepared to build the coalitions required to do this patient, taxing, technical and unglamorous work. Only by doing this can we truly take back control of our economies and societies and halt the wholesale looting of the world that threatens us.” What can you do to add to Bullough’s call?

The writer teaches literature at the University of Nairobi. He can be contacted at: Tom.odhiambo@uonbi.ac.ke; 0720009155.