Oxfam’s Take on the Paradise papers

27
4,014 views
Paradise Papers
Paradise Papers

The Paradise Papers like the Panama Papers have yet again exposed the iniquities of tax havens. Zambia like several other African countries has not been spared the injustices and harmful impacts of tax dodging.

A media sweep on broader issues of transparency and accountability in Zambia shows that mismanagement and corruption are hardwired in the country’s financial and procurement systems. Zambian citizens have heard with frustration a litany of complaints about tax avoidance by high net worth individuals and corporates.

This is in addition to the shocking
annual Auditor General’s revelations of a wasteful and inefficient public service. These malpractices are compounded by a lack of prioritisation in how the country’s meagre public resources are used. A case in point is the procurement of fire tenders, ambulances and the
construction of the Lusaka-Ndola dual carriageway. Citizens are also frustrated that recurrent scandals and abuses fizzle out with little repercussions for perpetrators. Seldom has there been
any kind of legal consequences for most of these corporations and politically exposed individuals in and outside government responsible for mismanagement of the nation’s resources.

The iniquities and implications of such a damaging and rogue system are widespread and immense. These abuses are both the root of sustained inequality and an important obstacle to
poverty reduction. For instance, a staggering 30% of rich Africans’ wealth – a total of $500bn is held offshore in tax havens. These rich Africans are using the global network of tax havens to
hide about $14bn a year in taxes. At the same time, corporations have been estimated to prejudice Africa of $38bn annually in lost tax revenues. These figures when taken together with
other resources lost illicitly, dwarf the annual aid flows to Africa.

Such revenue losses compound problems of mounting and unsustainable debt, tightened spending on health, education and social protection. The implications this has on the poorest in society especially on women and girls who are often left to pick up the pieces own their own are significant.

When the public financial and procurement systems are dysfunctional; high net worth individuals and corporates take advantage of porous taxations systems to deprive government of due taxes, public resources are lost to corruption and it is the poorest people that pay the price. Poor people’s tax bill rise as government tries to bolster tax revenues, and with little public support the poor must dip into their own pockets to access essential services like health and education.

The money lost by African governments a year is enough money to pay for healthcare that could save the lives of 4 million children and 200 thousand mothers and employ enough teachers to get every African child into school.
In the context of Zambia, loss of significant tax revenues and unregulated public spending have resulted in excessive debt and alarming contraction beyond sustainable levels.

The Financial Integrity Report 2015, as quoted by the Financial Intelligence Centre of Zambia, on illicit financial flows, Zambia is estimated to be losing an average of US$2.8 billion per year, through financial flows, while current the debt borrowing stands at about 47% of GDP.

Oxfam in Zambia notes with sadness that these malpractices are not isolated systemic and happen in a context of a
constrained civic space where citizen’s rights to exercise their voice are being clawed back.

These scenarios are tantamount to auctioning the country and the country’s resources to elite capture.The sense of impunity is dramatically affecting citizens’ trust in the rule of law and role of the State. It is also in the country’s interest to safeguard some economic gains recorded over the years. Much can be done by government in collaboration with civil society and citizens.
Government needs to close tax leakages. This could be done byensuring tax reforms that make tax systems more water-tight and by re-considering tax incentives, double taxation agreements (DTAs) with tax havens and offshore jurisdictions.

Prevention of wasteful and irregular public expenditure should be a top priority forgovernment as part of its strategies for poverty and inequality reduction. This means that unfair and abusive practices should not only be called out, but sanctioned.
Government and oversight institutions must be agile, consistent and efficient in dealing with all unfair and abusive practices.

Oversight institutions that are tasked with ensuring transparency and accountability in the utilisation of public resources must be strengthened to ensure that they are able to
effectively execute their mandate independently, and without fear or favour.

Zambia needs to implement recommendation by the High-Level Panel on Illicit Financial Flows by maintaining registers for beneficial owners of companies, strengthening
corporate governance and financial related laws as well as enactment and effective facilitation of access to information by citizens. Oxfam is calling on all public leaders to work together, to ensure that recent revelations of misuse and illicit externalisation of resources are acted upon.

We are calling on citizens to become a unifying force for change that leads to improved livelihoods for Zambia’s men and women, so that Zambia’s wealth and growth can benefit all rather than fanning further inequality. Oxfam is committed to offering practical solutions. We are committed to creating convening spaces for dialogue to challenge harmful tax give-aways and other forms of mismanagement of public finances.

27 COMMENTS

  1. So ati bwanji bwana HechiHechi. Is he still proud of offshore “investiment” now that the cat has been let loose?
    Disaster.

    0

    0
    • African leaders like the flight pilot can collect as much tax you think of, but without a vision they will still do nothing, that’s why this article has not said anything about these investments in relation to Europe and American, how come Europeans and American politicians are running their healthy systems perfectly well even when the Queen, big businessmen like Carlos slim, George soros etc have been mentioned as well. Why should this be scapegoat for their incompetence in running the affairs of their countries. They are just incompetent even if you gave them the entire American budget to run a tiny nation like Gabon with a population of a million people, they will still ask for more donor aid.

      0

      0
    • RudeMonk. Zambia has Economical multi facility zones which are tax heavens for foreigners. On top of that, the government gives 5 to 10 years holidays to international companies. What is different with HH and what government is offering foreign companies? Maybe as a country we should start giving tax holidays to local investors to stop them from exploiting the same laws at international level

      0

      0
  2. HH laughed it off this is an analysis by persons schooled in poverty reduction and the direct impact of hiding money offshore often illegally obtained we miss Levy

    0

    0
  3. While it is true that tax avoidance isn’t illegal as HH pointed out in his defense, I worry about how trustworthy he would be as President given that he is not so keen on helping the same country he seeks to lead by paying a fair share of taxes. Seems to me that the most important person to HH is only HH! Friendly advice to my UPND brothers and sisters, change your leader and the next election will be a walk in the park.

    0

    0
    • Don’t pretend to be not knowledgeable, HH pays his share of taxes.How many businesses interests does he own inside Zambia? Even Sata had a lot of properties abroad. There is no sane business man who puts all his eggs in one basket. What surprises me is that a day hardly passes without discussing HH wealth, why PF cadres, does it pain you so much that he’s rich? Work had also and it will happen to you.

      0

      0
    • But what about Mr. Lungu, what has he done to address these ills, I bet he laughs them out with a tot of whisky! Imagine US $ 1 million just for a truck! My foot.

      0

      0
  4. This is a very good article. Patriotism which we were taught when we were young is the call here. We should not believe in individuals but our country. There will be no better place than home. The problem does not only rest with poor public management and financial gangsters, it also rests with citizenry. We have reached the abyss of reasoning which is highly characterised by comments made by bloggers. Citizens do not want to support good ideas and good leadership but are akin these financial gangsters since they blindly support them based on tribe. Tribalism has become a very big thorn in the flesh of Zambia. People only see comments and views based on tribe. The choice is in our hands….

    0

    0
    • HH has shares in lots of companies here in Zambia. After paying his taxes to ZRA he decided to grow his financial empire by investing in countries were the returns on his capital is higher than back home. Dangote is doing the same. The chinese are doing the same. Western and American companies have invested in east Asia where labour costs are lower then in their own countries. This is how business works. If today you learn that a standard 3 bed roomed house which cost K200,000 to build can give you a return of K20,000 per month in South Africa compared to K5,000 in Zambia surely what can stop you from building 10 houses in SA to make yourself a cool K200,000 per month if you have the resources to do so provided you have pay your here in Zambia. Foreigners are reaping us day in and day out…

      0

      0
  5. …continued….Remember that these politicians you support with your blood and bones will not take you to State House. They will not even remember you. We need to think of generations to come. STOP pblind support, stop tribal support, support good ideas like what Oxfarm has told all of us here. Do we need foreigners to lecture us for us to see that we can do better. With tribal politics, people stop seeing sense in what is sense. They only see tribe. Let us be patriotic.

    0

    0
  6. Even if all these taxes are paid, what are you doing with it? Just stealing in the name of buying fire tenders, and making the top most leader gets rich overnight. That is he his money. Have yours and pay tax period.

    0

    0
  7. Governments, mostly African governments and selfish individuals/leaders looting and hiding money abroad, tax evasion and obviously at a price where ever they put their money. HH has been caught in this but then again, the question is why did he decide to invest in another country? Rocket science? Far from it, his investment is getting a huge dividend, personal and nothing to do with anybody! Does he pay taxes in Zambia through his businesses? Absolutely! The question we need to ask ourselves dwells around taking EL as a case study among others. Where does he bank his money. Can we have his tax returns published? We have people like Kaizer, Kambwili too many to mention. Any chance of showing tax returns publicly since they are public servants. It’s rather folly to comment for the sake of…

    0

    0
  8. The next President of Zambia should look no further than Lusaka times. We have enough people here that exhibit sound intellect apart from the few that take everything for granted and resort to name calling and insults. This mediocrity of name calling has its place nowhere but the pit latrines our people are still using in the villages. The majority on here can effect change by directing discussions to possible solutions. The mindset change should be exhibited on this platform, no less! Trust me, our law makers read the comments on here. Give credit when it’s timely due and support not anything that hardly adds up in the name of loyalty! Talking of loyalty, we ought to be loyal to the country not the dude or dudess that buys you candy (metaphor)!

    0

    0
  9. I was taught in my accountancy training that Tax avoidance was not an offense! It is part of tax planning, period! It is Tax Evasion which is an offense. HH as a clever investor is justified to use principles of Tax Avoidance. You can’t compare Tax Avoidance with Corruption! Bakaponya read a bit on tax.

    0

    0
  10. Paradise papers have come at a great time for the PF regime, all pipo are talking about is HH.
    The government of the day is the problem in zambia today, we have a president who is obviously a figurehead for others, be it , as pipo RB or Chinese.
    Better question how do chinese selling in roadside stalls get permits to work, what power does ECL have over chinese when he directs a carwash illegally built on kitwe carriageway be demolished, yet her it us today operating, the sycophant Lusambo said yes boss but look , nothing has happened. Major projects go to chinese with menial laboring jods, poor wages conditions to us zambians.. How do our engineers get experience

    0

    0
  11. We borrow from the chinese to do the project, then we pay them to do the work then we have to repay the loan and interest. How savvy is this regime.
    Why cant pipo see that we are being overtaken by the chinese through economics. They are giving us plenty of loans without asking if we can repay, is our regime concerned about grandchildren. NO They are still in that pitiful narrow minded belief that ITS OUR TURN TO CHEW.. cant pipo see thats thats why we are constantly in poverty tbat we can never overcome. The ruling party inner circle bebefit but those poverty stricken supporters lacking in education but believing false promise remove in poverty ZAMBIA WAKE UP BEFORE IT IS TOO LATE

    0

    0
  12. Let us first start by understanding Tax heaven.
    A good definition will enlighten us and be able to comment effectively.
    For example, the Zambian government also give investors tax liberties, so what are these tax liberties?
    I can only invest where the conditions will be favourable and make profit.
    The only problem is when the profits made from off-shore investments are not in anyway been benefiting your country. So all those mentioned in these papers, do they have other investments in their country? If they do not bring their profits back then that is another issue.
    Some take money from local economy to go and buy casinos and mansions only to benefit themselves so which one is better?

    0

    0
  13. The issue of government expenditure is totally irrelevant to tax evasion. Government expenditure and tax evasion are not cause-effect issues. In its present form, civil society in the country lacks capacity to investigate and prosecute financial crimes. That is how lack of legal evidence to warrant investigation and prosecution of tax evaders is disappointing good taxpayers. There is no need to stir a storm out of a tea cup. What is needed is establishment of equitable tax systems that leave room for good returns on investment.

    0

    0
  14. This is neither here nor there. We should start with our home (Zambia) which has created Tax havens for Chinese investors. What the chinese Government has done is not to discourage their investors to come to Zambia, but rather to encourage them to make cheap money which they can later send to facilitate investments in their country. Reading those papers does not give you even very good insight as to whether HH has an Offshore account or not. They tell you that he was a a director of one of those off shore companies which may not even have invested in Zambia at any time to pay that tax to Zambia. In my Opinion with or without tax avoidance Zambia collects enough tax which is stolen through dubious tenders and procurements. Its is this vice which is a bigger cancer to the Zambian economy…

    0

    0
  15. It’s not Oxfarm ….It’s Oxfam.
    The government wastes a lot of money and most of it is stolen by leaders ! Get up and make your own money, invest it and let it grow. HH is investing sensibly in offshore accounts and most of his is benefiting Zambia. Stop scapegoating him !!

    0

    0

LEAVE A REPLY

Please enter your comment!
Please enter your name here