Advancing Just, Progressive and Inclusive Tax Regime for Women and Vulnerable Malawians
In 2014 a joint study by Norwegian Church Aid and a local Catholic NGO, Catholic Commission for Justice and Peace, established that Malawi loses US$43.87 m annually through "corporate incentives".
Lilongwe, Malawi-Malawi faces significant poverty-induced challenges, including low literacy, unemployment, poor health services, climate change and skyrocketing inflation, writes Ovixlexla Kamenyagwaza-Bunya.
Despite boasting of surplus revenues collected by the Malawi Revenue Authority and other investors in the last quarter of 2022, Malawi continues to struggle to provide essential public services. For example, the suspension of theatre-related and maternity labour services at Bwaila and Kamuzu Central Hospitals during the same period.
To address these disparities and ensure the well-being of its citizens, Malawi needs sustainable measures, including a progressive tax regime that prioritises tax justice and social protection measures.
Especially for women and vulnerable populations. Achieving this requires a transformative approach to fiscal and tax justice. Promoting gender-responsive policies. Substantive investment in value addition industries. Effective management and distribution of resources. Restructuring debt. To create a just and sustainable economy centered on the welfare of its people.
Tax Justice and Progressive Taxation
Tax justice is fundamental for equitable economic development. Reports by Action Aid, Oxfam and other partners on Tax Justice campaign and Tax Justice Network have shown that, like most developing nations, Malawi loses millions of dollars annually due to global tax abuse by multinational corporations and individuals. Tax justice systems targeting multinational corporations and reducing tax evasion can increase domestic revenue significantly.
The Tax Justice Network estimates that, in addition to money laundering difficulties, global tax evasion by multinational organisations and private people costs Malawi over K90 billion in lost tax revenue per year. These vast sums could be directed towards financing public services such as education and healthcare and implementing effective social welfare systems, which are essential for human development.
The government must implement innovative domestic resource mobilisation systems to appropriately support public services without stifling citizens with unsound austerity measures and heavy taxes. Impeding on effective public service delivery and placing the burden of unpaid care work on women.
This includes multination corporations-targeted tax justice systems. For instance, it is on record that the Australian mining corporation Paladin Energy transferred large sums of money from Malawi and back to Australia via the Netherlands, costing Malawi US$27 million in taxes.
In 2014 a joint study by Norwegian Church Aid and a local Catholic NGO, Catholic Commission for Justice and Peace, established that Malawi loses US$43.87 million annually through "corporate incentives", which, in simple terms, is called tax avoidance. These instances demonstrate that if the government adopted equitable and fair taxation policies, there are alternatives to punishing tax regimes.
One exemplary project, "Breaking the Barriers and Tax Justice for Gender Responsive Public Services," implemented by ActionAid Malawi and partners, focuses on raising fair taxes, particularly corporate taxes, to increase the size and share of national budgets for public education, especially for girls and marginalized children. It also empowers communities and civil society structures to monitor education budgets and expenditures, to ensure accountability in delivering gender-responsive policies.
Malawi needs a feminist approach to fiscal and tax justice which does not undermine gender equality but recognizes links between unpaid care work and the financing of public services. To lessen the developmental burden for women as well as create a better environment in which women can equally and economically strive.
Where transformation can be influenced from lowest sections of society to the policy makers and drivers themselves. The economic architecture needs international institutions that can shape and frame a fairer global economy that facilitates economic growth for developing countries. Not cut off the development ladder and capitalize on poor countries as a source for raw materials but as equal economic players.
The global south needs economic policies and approaches that speak to the context and realities of nations. Policies that allow state control over markets and have vested shares and direction of industries, with conditionalities and progressive taxation over foreign investments. To cushion subsidies and provisions for essential sectors such as agriculture, education and health and stir economic development.
Not measured by profits made but by the wellbeing and individual transformation of the people. The same protectionist policies practiced by the global north while they condition neoliberalism in exchange for credit facilities to African states.
Tax policies that create a better environment for all to economically strive. Drive the economy in terms of job creation, build industries for value addition and create readily available markets for farmers raw commodities and resources.
Taxes that are used for mining alternatives that benefit the country and not give away much needed resources on a free platter or benefit the greedy few. An economy that explores unlimited international markets and drives exports to address the shortage of forex.
An economy that allocates resources to social protection programmes and build and maintain critical infrastructure, like roads and hospitals, enhance access to services- markets, banks, mobile networks, electricity, water, create job opportunities, and stimulate economic growth.
Enabling access to clean water and alternative sources of energy which create a burden for mostly women and girls who must endure long distances and waste time to fetch water and firewood in form of care work.
Malawi implements neoliberal macroeconomic policies supported by the World Bank and the International Monetary Fund (IMF), contributing to rising poverty levels. This constrains its ability to make independent economic decisions amassing debt for consumption.
Malawi must ease its debt burden by restructuring debt repayment mechanisms to overcome these challenges. By doing so, the country can free up resources that could be invested in industrialization for economic growth and for essential sectors like health, agriculture, and education.
In the last five years or so, Malawi has experienced a lot of climatic and natural disasters, the recent cyclone Freddy being the worst. The devastation of these cyclones has come as Malawi struggles to recover from the economic shocks of Covid-19. Mitigating these disasters requires the country mount an effective disaster preparedness strategy supported by necessary infrastructure and a working economy to avoid excessive debt.
If effectively managed, progressive tax policies could speak to emergency preparedness, responsiveness, management and recovery. Ensuring that no one is left behind during challenging times without incurring excessive debt as of Malawi’s current position.
Tax revenue should provide for social protection measures. Crucial in safeguarding vulnerable populations and women. During the Covid-19 pandemic banana vendors, domestic workers, people in part time and minimum paid jobs suffered due to forced lockdown measures which were unrealistic for their income. People being arrested for not wearing masks when they could not even afford to buy a mask. Crucial sectors lacked in resource and personnel. Public hospitals were overwhelmed.
The people had to solicit funds on social media to cover the burden while government seemed helpless yet excessively borrowing. People died like chickens just for lacking basic oxygen. The Cyclone Freddy disaster lost many lives through lack of preparedness and coordination. People were stuck in trees for days without rescue and later went days without food in camps due to lack of resources.
Also, taxes ought to ease the burden of climate change debt the country is forced to incur. Faced with the same calamities, the situation would be the same, every man for himself- rich or poor with those in high positions abusing and stealing funds.
Tax justice entails support for small and indegenous businesses in formal and informal sectors. Lowering tax burdens for small enterprises and providing favorable interest rates from financial institutions can help these businesses grow and contribute to economic development.
Additionally, empowering marginalized populations, including young women, LGBT individuals, and sex workers is vital for promoting economic security and inclusivity. Providing interest-free grants, training, and job opportunities can create an enabling environment for these individuals to participate in income-generating activities.
Even policy and law change especially for the case of sex workers. Creating a safer environment for their trade, increases their bargaining power, reduce discrimination and stereotype in society and returning revenue in form of taxes for improved public health services.
To achieve a transformative and feminist approach to fiscal and tax justice, Malawi must place human rights and care at the center of economic objectives and indicators. Not just revenue and profits. Taking into account labour division, the decency of work and wages as well as the gender patterns. Appreciating access to opportunities, economic resource management, its distribution, and human wellbeing.
Recognizing and rewarding unpaid care work. Questioning gender norms and colonial foundations of the economic system. Looking at access and control of resources. The intersectional analysis that looks at not only gender, but also how different systems of power interact and access power and how that impacts on different groups in the society.
This approach challenges oppressive power relations between men-women, rich -power, elite-vulnerable groups. It promotes inclusivity, and values care for all life forms. Those having means of production will always have the power to construct and dominate values and decisions in society.
Without balancing the economic architecture, this places the poor and vulnerable groups at a disadvantage in decision making processes and all dimensions of life.