This document discusses financing social protection through taxation in Zambia. It outlines that taxation plays a key role in redistributing wealth from the rich to the poor through public spending. While some African countries are experiencing economic growth, inequality remains a large problem both between and within countries. For sustainable financing of social protection programs, domestic resource mobilization through fair taxation is critical. Tax systems should be progressive to curb inequality and ensure sufficient revenues are generated to fund basic public services like health, education, and social protection.

1. Tax Justice in Africa and Social Protection Financing
for Zambia Social Protection Colloquium 2017
by
Cephas Makunike
Thursday 30th November 2017
Lusaka, Zambia
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2. Presentation Outline
 Introduction
 Domestic Resource Mobilisation (Agenda)
 Context – Inequality & Social Protection
 Tax Justice Narrative
 Role ofTaxation
 Role ofTaxation versus Inequality & Social Protection
 Conclusion
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3. Introduction (1)
 Many narratives about Africa
 Africa is a dark continent (The Economist)
 Africa is Rising (The Economist)
 Is Africa really rising?
 Measurement of growth (GDP) mainly by international institutions e.g.
IMF,WB
 What should be the more appropriate proxy of measurement?
GDP,GDP per capita?
Should the issue be growth or development?
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4. Introduction (2)
 Africa Rising – Only if and when it raises all boats
 From GDP growth strategy to Economic StructuralTransformationAgenda
& the role of DRM &Taxation in financing it
 For a long time the pursuance of “GDP growth” characterised development
strategies
 Pan-African Institutions now talk about “Economic StructuralTransformation”
 What changed? Is this a paradigm shift?
 CSO role: engage with the agenda to promote it from change of rhetoric to
a change in practice?
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5. Context (1) – Inequality & Social Protection
 Global Inequality continue unabated - As President Obama told the UN General
Assembly in his departing speech in September 2016: “A world where 1% of
humanity controls as much wealth as the bottom 99% will never be stable.”
 Statistics at a glance (Oxfam Briefing Paper, 2017)
 Since 2015, the richest 1% has owned more wealth than the rest of the
planet
 Eight men now own the same amount of wealth as the poorest half of the
world
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6. Context (2) – Inequality & Social Protection
 Need for a more inclusive, equitable and accountable tax systems in Africa
 The ever growing wealth inequality between and within African countries
threatens both political and economic stability of these countries and could reverse
the marginal gains achieved in the last decade.
 There is need to counter and reverse the trend towards regressive tax policies
that has seen the introduction or increased application of consumption taxes that
increase the burden on the already disadvantaged low income earners and their
families.
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7. Context (3) – Inequality & Social Protection
 Equally, in view of increasing wealth concentration in the hands of the richest
few, it is essential to push for reforms and introduction and enforcement of policies
that will encourage the redistribution of income
 Tax systems play a key role in redistributing wealth. The tax system itself is the
key lever to directly address inequality, redistributing income from the rich to the
poor by taxing the rich more heavily and directing public spending to benefit poor
people.
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8. Domestic Resource Mobilisation Agenda (1)
 International Financing for Development Conferences & DRM
 2002, Monterrey, Mexico, on 18-22 March 2002 (“Confronting the challenges of financing for
development: a global response”)
 “Leading actions” – “Mobilizing domestic financial resources for development”
 “ In our common pursuit of growth, poverty eradication and sustainable development, a
critical challenge is to ensure the necessary internal conditions for mobilizing domestic
savings, both public and private, sustaining adequate levels of productive investment and
increasing human capacity. A crucial task is to enhance the efficacy, coherence and
consistency of macroeconomic policies. “
 “We recognize the need to secure fiscal sustainability, along with equitable and efficient
tax systems and administration,..” (p7)
 2008, Doha Declaration on Financing for Development (Nov-Dec 2008)
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9. Domestic Resource Mobilisation Agenda (2)
 International Financing for Development Conferences & DRM cont.
 2015 (FfD3) - -“A global framework for financing development post-2015”
 Addis Ababa Action Agenda - Action Areas are as follows: (AAAA, pp.1-9)
 domestic public resources, domestic and international private business and finance,
international development cooperation, international trade as an engine for development,
debt and debt sustainability, addressing systemic issues and science, technology, innovation
and capacity building.
 Financing SDGs, Africa’s Agenda 2063 & other development Agendas
 DRM as a critical means of implementation of the development agendas
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10. Tax Justice(1)
 Tax Justice
 socially just, accountable and progressive taxation systems
 tax policies with pro-poor outcomes and tax systems that curb public
resource leakages and enhance domestic resource mobilisation
 TJNA spearheads tax justice in Africa’s development by enabling citizens
and institutions to promote equitable tax systems through research,
capacity-building and policy-influencing.
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11. Tax Justice (2)
 Tax Justice is economic, cultural and social justice:
 Tax is a human rights issue
 Human rights ( e.g. rights to education, food & social protection as
enshrined in a country constitution and as per international commitments
(e.g. Article 4 UNConvention on the Rights of the Child (UNCRC), Africa
Charter on the Rights of the Child (ACRC), Abuja Declaration on health are
child rights)
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12. Role ofTaxation (1)
 Roles ofTaxation can influence tax justice
 4 Rs of taxation (revenue, redistribution, repricing, representation)
 Fair taxation (progressive tax system, sufficient revenues, well governed tax
exemptions, effective tax administration, pro-poor government spending,
accountable public finances) and the guaranteeing of human rights
 Pro-poor expenditure guarantees investment in basic public services such
as (e.g. on health, education and social security)
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13. Role ofTaxation versus Inequality (1)
 Hinged on the roles of taxation (4Rs) and governance in tax policy and
administration
 Taxation can reduce or exacerbate inequality
 Inequality issues arise both on the revenue and expenditure side of fiscal
policy
 Revenue side
Direct taxes and progressivity
Discuss indirect taxes and progressivity
Distribution of taxes (wealth taxes, CIT, PIT, Consumption taxes, etc.)
IFFs and BEPs (who are the perpetrators?)
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14. Role ofTaxation versus Inequality (2)
 Expenditure side
 Lets discuss allocation of public revenue to basic public services (social
protection)
Is government expenditure pro-poor
Important Indicators -Expenditure as a share of total annual budget/GDP
Quality of spending is also key
Indirect expenditure, e.g. (Tax incentives)
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15. Public Expenditure on Basic on Education Stats
Source: African EconomicOutlook Statistics, 2017
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0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
EXPENDITURE
(%
OF
GDP)
TJNA MEMBERS' COUNTRIES
Public Expenditure on Basic Education (Year 2000 -2015)
Public Expenditure on Education (2000 - 2015) (%
of GDP)
African Governments Dakar Commitment

16. Public Expenditure (cont.)
 Taxation is the most important and sustainable source of revenue for any
government to ensure that it caters for the basic needs of its citizens
 Without adequate resources, rights to basic amenities and social services
such as health and education will remain mere aspirations. Revenue from
taxation is therefore critical for the fulfilment and realization of the
economic, social and cultural rights of citizens
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17. Conclusion
 Existence of opportunities (e.g. DRM) & Challenges (e.g. IFFs) to financing social
protection
 Therefore need for African Governments to strengthen DRM mechanisms to enhance tax
revenue mobilisation and to stop IFFs
 DRM is critical to guarantee “inclusive and sustainable social protection”
 DRM is the most reliable and sustainable source of revenue to finance SDGs (include social
protection) (Addis Ababa Action Agenda 2015)
 Additionally, tax justice (think the 4 Rs) is key to providing sustainable financing for social
protection and addressing inequality in general
 You can also visit our FairTax Monitor work on http://maketaxfair.net/ftm/
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18. Thank you!
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