Continued theft of public resources will force people to start evading tax – CTPD

CTPD executive director Isaac Mwaipopo has warned government to be cautious of how abuse of public resources will affect tax compliance if the general public loses confidence in those entrusted with public funds.

Commenting on revelations of the Auditor General for the year ended 2016, Mwaipopo observed that Zambia had potential to finance its own development if theft was stopped.

“The revelations of the Auditor General’s report and newly leaked Paradise Papers are an indication that the country has potential to finance its own development if tax leakages are sealed and misappropriation of funds is treated with tough punitive measures. The government needs to be cautious of how abuse of public resources will affect tax compliance if the general public loses confidence in those entrusted with public funds. This should also be a call to the government to improve the performance of corporate taxes as the recently leaked paradise papers have revealed how the country is losing significant revenues through tax avoidance of which Zambia is cited to have been deprived of around $3 million in taxes from a named company. This needs appropriate legislation to be enacted such as compelling Multinational Corporations (MNCs) to report their business activity on a Country by Country basis and mandatory disclosure of beneficial owners of various companies in order to monitor transactions,” Mwaipopo stated.

He stated that it was sad that government was exploiting the poor through taxes.

“We further note with sadness that the majority poor have continued to subsidize the rich on tax contribution, for instance, the Auditor General’s report shows that ordinary citizens are the biggest contributor towards tax in the form of Pay as You Earn, the report shows that a total of ZMW8,060,754,503 was collected through Pay as You Earn, this is way above the contribution of key economic sectors such as mining which contributed ZMW3,077,421,437 through mineral royalty tax leaving the burden to the few employed population while companies continue making supernormal profits,” Mwaipopo stated.

Mwaipopo stated that there was urgent need to end the scourge of theft and abuse of resources meant to support the vulnerable in our society.

“There is urgent need to end the scourge of theft and abuse of resources meant to support the vulnerable and struggling majority in our society. It is sad to note that over the years, there has been no stiff punitive action taken to perpetrators of the financial scandals showing serious weakness in the current public financial management system. Key poverty reduction programmes such as the Farmer Input Support Programme (FISP) have continued to record many weaknesses such as issuance of inputs to unqualified farmers, late delivery of inputs and so on and spending beyond stipulated support amounts,” Mwaipopo stated.

He noted that the issuance of farmer inputs to unqualified farmers also posed as a weakness to poverty reduction programmes.

“We find it deeply concerning to learn that 1,819 E Voucher cards were loaded with K8,275,981 instead of K3,819,900 resulting in the cards being loaded with an excess amount of K4,456,081. What confidence do we have that the 2018 proposed allocation towards the 100% E Voucher roll out will be put to good use? He asked.

And Mwaipopo stated that the continued mismanagement of public funds defeated the purpose of government achieving its poverty eradication goals through key sectors such as agriculture.

“This continued mismanagement defeats the purpose of government achieving its poverty eradication goals through key sectors such as agriculture. Additionally, the report revealed many cases of questionable payments amounting to millions of kwacha, over payment of allowances, and unauthorized excess staff on government payroll with different individuals being cited in the report. The continued embezzlement of public resources earmarked for development makes it difficult for government to achieve targets, resulting to total waste of the nation’s scarce resources,” stated Mwaipopo who also appealed to President Edgar Lungu and law enforcement agencies to act on the evidence provided by the Auditor General.

         

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