Zambians have every right to demand accountability of resources which they work so hard to earn, says Dr Caleb Fundanga.
And Dr Fundanga, who is former Bank of Zambia governor, says the scourge of corruption in Africa must cease if the continent will have tax compliant societies.
Meanwhile, Dr Fundanga says there is need to interrogate how Switzerland has become Zambia’s biggest trading partner for copper concentrate exports as frequently cited by the Central Statistical Office (CSO).
Speaking during the official book launch of the critically-acclaimed ‘Lifting the Veil of Secrecy: Perspectives on International Taxation & Capital Flight from Africa’, Dr Fundanga said Zambians had every right to question the government on how tax payers’ money was spent.
“If you see that somebody is abusing money, which you paid for through taxation, I think you have got a right to question them why the money you worked for, and you willingly gave to the government through ZRA, should now be abused in that manner,” Dr Fundanga said, Saturday.
Successive reports from the Auditor-General’s office have revealed increased wastage of public resources despite higher tax revenue collections recorded in recent years.
According to the latest Auditor-General’s report released last November on the Accounts of the Republic for the financial year ending December 31, 2016, the misapplication of public funds, among others, was cited as having increased by more than five times the misapplication level of 2015, from K28 million to K162 million.
Among other highlights contained in the Report were also revelations that unaccounted-for revenue had leaped to K3.7 million in 2016, up from K558,449 in 2015, while the misappropriation of funds also hit a staggering K3.6 million in 2016.
And Dr Fundanga said African governments must learn from some wealthy European countries’ effective use of tax collection, such as Norway, if Africans will see the benefits of paying taxes.
“If individuals and companies are going to pay taxes, they must see where the money is going. I am sure that many of our African countries; this is the biggest problem; even if people are willing to pay? You just see some money has been spirited away into somebody’s pocket, you are not going to be ready to pay tomorrow,” Dr Fundanga observed.
“But if people can see that each time when they pay, they have got new roads or health facilities have improved, which is the best in Norway. Everybody is so happy that ‘I can stay here, my children have got an education; the health services are good, the government is spending the tax money we pay on these things.’ You find that compliance is very high.”
He observed that Zambia, like other African countries, was capable of financing its own socio-economic development through effective utilisation of tax revenues without resorting to debt.
“If we don’t collect our tax revenues, we will end up going to borrow. Is that what we want? Can’t we finance our own development without having to borrow? That is the challenge that we all face; I am sure that we can be able to address this problem,” he observed.
Dr Fundanga, who is now chief executive officer of Harare-based Macroeconomic and Financial Management Institute of Eastern and Southern Africa (MEFMI), said Africa would only have tax compliant societies once corruption was eradicated.
“So, one of the challenges for Africa is to make sure that this scourge called corruption, the abuse of public resources, must be addressed if we are going to have tax compliant societies,” he said.
Meanwhile, Dr Fundanga questioned how Switzerland had become Zambia’s biggest trading partner for copper concentrate exports as frequently cited by the CSO.
“In recent times you have read that the biggest trading partner for Zambia is Switzerland; all your copper goes to Switzerland. Does Switzerland have the capacity to use your copper? Is it really being utilised in Switzerland or it’s going somewhere? Then why is it that it’s being [cited] as going to Switzerland?” asked Dr Fundanga.
“Even when you listen to the CSO during the monthly statistical bulletins that they give, consistently, Switzerland has become Zambia’s biggest trading partner. Obviously, it’s something that we need to interrogate in order to understand how Switzerland has suddenly became our biggest consumer of copper, and what the implications are. Switzerland is known to be the original tax haven anyway.”
Dr Fundanga, who is also director of the Institute for Finance and Economics (IFE, Zambia), was among several authors of the book that was unveiled to the public, with his contribution focusing on “the rise and fall of the mining royalty regime in Zambia.”
The book was produced as part of a research project: Taxation, Institutions and Participation (TIP).
TIP investigates the effects of tax havens on domestic revenue systems, institutions and on citizen participation in African countries.