As she boarded the bus at Mbare Musika in Harare, 11-year-old Alice Muleya’s heart was heavy with fear and trepidation. Her destination was Binga and she couldn’t shake off anxiety that clung to her like a shadow.
Though her parents had informed her that they were travelling to visit a family member, Alice couldn’t help but sense something was amiss.
Harare’s already stark social and economic inequality has been further aggravated by tax avoidance and evasion among corporates operating within the city.
As a result, families such as Alice’s were left destitute, struggling to afford even the most fundamental necessities, such as healthcare and education.
Alice’s parents, hailing from Binga, migrated to Harare in 2011 in hopes of finding better opportunities.
Presently, her father earns a living as a caretaker at a school in Borrowdale, while her mother supports the family as a vendor.
“When we came to Harare in 2011, things were better than now because we could look after our family. Now things are difficult and we can’t keep up with living costs here in Harare,” Alice’s father Normal says.
“We have decided to take Alice, our only daughter, back to the village. Schools there, even though the infrastructure is poor, are cheaper than here. We could also cut transport costs, among others. We have no choice.”
- Feature: How tax evasion fuels child poverty in Zim
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Alice was sent to live with her unemployed aunt in a remote village in Binga, over 600km away from Harare. She was enrolled at Bunsiwa Primary School, located in an underprivileged district, but soon discovered that the public school was under-funded and overcrowded.
Due to the absence of desks, chairs, textbooks, and permanent teachers, Alice’s education suffered immensely.
The dearth of resources made it impossible for her to keep pace with her studies, causing her to feel increasingly exasperated and powerless.
Alice’s predicament is far from unique, as millions of children across Zimbabwe grapple with extreme poverty.
According to the United Nations Children’s Emergency Fund, approximately 4,8 million children in the country live in impoverished conditions, a situation exacerbated by a host of challenges, including widespread tax avoidance and evasion.
Tax evasion is contributing to extreme poverty among children in Zimbabwe, with millions suffering as a result.
Lack of political will and ineffective tax laws have allowed the problem to persist, exacerbating the already dire economic situation in the country.
Children like Alice, are deprived of essential services such as education, healthcare, and proper nutrition, which are imperative for their well-being and development.
According to a report titled Capital Flight, Natural Resources, and Institutions in Zimbabwe, compiled by Zimbabwean academics and researchers, the country has suffered enormous losses, running into billions, due to capital flight in the past three decades.
This loss is attributed to fraudulent invoicing and tax evasion.
The researchers noted that major minerals trading in Zimbabwe typically involves companies from the country’s principal trading partners, which comprise South Africa, Canada, Australia, the United Kingdom, China, and the United States.
“Evidence from the African Development Bank and Global Financial Integrity (2013) also shows that Zimbabwe has lost a cumulative US$12 billion in the last three decades through illicit financial outflows (IFFs) ranging from secret financial deals and tax avoidance to illegal commercial activities,” the report says.
According to Afrodad, the most pressing consequence of IFFs is a substantial loss of revenue, leading to the disappearance of opportunities for domestic investment and consumption, both in the public and private sectors.
Afrofad says the revenue lost due to these outflows could have been channelled towards productive economic and social investments, which would have facilitated the achievement of the government’s economic growth objectives.
“It is important to note that IFFs starve the national purse of potential revenue that could help in repaying back loans and stimulating economic growth,” Afrodad argued.
Some of the most common forms of tax-related corruption perpetrated by companies and individuals include tax evasion, under-declaration of income, falsifying income records, hiding money, under-reporting income, and institutionalised smuggling of goods, among others.
“Due to the effects of tax avoidance and evasion, you find a young person at the age of 10 on the street selling bananas or tomatoes because he cannot afford to pay fees,” says Phakamani Moyo, programmes co-ordinator for Friendly Service Delivery for Adolescents and Youth, a youth-led community-based organisation that supports sexual and reproductive health and rights.
“You find a young person who is supposed to further his education but because the money is not there, that person ends up, either as a tout or kombi conductor because there are no jobs,” Moyo added.
“That revenue lost through tax evasion can create jobs. The impact is deeper and deeper because the revenue collected through taxes is channelled into someone’s pocket.”
Mukasiri Sibanda, a social justice activist, contends that inequalities are self-perpetuating, meaning that they tend to persist and even worsen over time without intervention.
“So, the rich become richer and the poor become poorer,” Sibanda said.
She says government can address this issue by introducing fair and equitable taxation regimes that regulate and control the unrestricted exploitation of multinational companies.
“The impact of IFFs is that at the end of the day, governments just don’t have the resources they need to finance service delivery,” said Chenai Mukumba, acting executive director of Tax Justice Network Africa.
Samuel Wadzai, the executive director of Vendors Initiative for Social and Economic Transformation, notes in some of his writings that tax evasion and avoidance disproportionately affects women compared to men.
“Where states do not have enough revenue to provide essential public services, women are more likely to fill the gap with their bodies and time, reducing the time they have for education, paid employment and rest and leisure.
“Similarly, as more women enter the world of work without state support, the burden of unpaid care falls on other female members of the family. This can limit girls’ abilities to access education and other rights such as leisure time,” Wadzai says.
According to women’s rights activist Samukeliso Khumalo, the central government should create a pro-poor national budget that incorporates and prioritises issues related to women’s rights and gender justice.
“This can be accomplished by improved national resource mobilisation through curbing illicit financial flows and corruption where potentially, tax is lost, evaded or avoided,” Khumalo, who is the executive director of Women’s Institute for Leadership Development Trust, argued.
Fortunately, there are organisations such as the Zimbabwe Environmental Law Association and the Zimbabwe Coalition on Debt and Development (Zimcodd) that are actively working to end tax avoidance and evasion in Zimbabwe.
According to Zimcodd’s report Zimbabwe’s Tax System: Opportunities and Threats for Enhancing Development in Zimbabwe, the majority of politicians in Zimbabwe are also business owners and lack the political will to create and enforce fair tax laws.
“They abuse their offices and powers to avoid and evade tax and siphon money out of the country despite the fact that the country needs resources for development. Some of them bribe Zimra officials or they may use threats to investigating officers so as to avoid tax,” the report reads.
Zimbabwe Revenue Authority spokesperson Francis Chimanda says their investigations have revealed that the country is losing “significant amounts” through tax evasion and avoidance.
“The exact amount lost through evasion or avoidance is not determined at the moment,” he tells The Republic.
Alice’s story is a timely reminder that tax avoidance and evasion have a real, tangible impact on children in Zimbabwe.
“It’s time to end this injustice and ensure that children everywhere can have access to the resources they need to succeed,” says Memory Dube, a mother of four children.
