New Zimbabwe.com

Radical rethink and imperatives for the forthcoming fiscal policy design

Spread This News

There are no candid conversations around the economy. All conversations are about power. Investors like certainty!
It defeats a right thinking Zimbabwean why we fight and show dirty laundry to a potential bride.
FOR decades there has been a significant amount of comment and debate regarding the fiscal policy, monetary policy, tax and current governmental policies. There are many more such “debates” around the forthcoming fiscal policy associated with other letters and articles, many points/opinions stated, refuted and stated again but it strikes me that this discussion is not just about liberal/traditional or corporatist/socialist views but rather what role “we the people” want our government to play in our society and our daily lives. The role will actually be more evident in the forthcoming fiscal policy.

I am a liberal who believes in small government. I am a stern believer in less government play in business outside providing an enabling policy and regulatory environment. I choose to believe that the best government governs least. Here’s why:
I believe that the less that a government takes from society in taxes, resources and capital, the more there is for individuals to leverage to the benefit of society. It is imperative that the government reduces civil service bill, state enterprise support and recurrent expenditures with no value addition. Government may need to deliberately expand the tax base than increase the tax quantum like the abhorrent mid-term fiscal policy. Zero-based budgeting or value addition based budgeting may need to be adopted.
I believe the majority of state enterprises have failed to discharge the desired socialistic mandate by any measure including but not limited to measures of increasing employment, contribution to GDP, contribution to the tax base, service delivery, growth and economic justice. If they have failed it’s time to quit those that do not fit the strategic thrust of any right thinking government. I believe the majority of the state enterprises no longer have significant strategic importance. They have failed. These state enterprises must be allowed to reconstruct, be weaned off government and, by extension, reduce tax burden on poor Zimbabweans.
I believe that a government should be as close as possible to the people as possible; that this is necessary for it to truly operate with the consent of the governed. The smaller the governmental unit, the better it can understand and accommodate local issues. I believe we require a smaller government. If we fail to have a small government but we want to be more intimate and govern with the consent of the governed we need to decentralise decisions relating to investment, tourism, infrastructure, economic development, and social welfare, labour amongst many other facets of government. By enabling provinces to be responsible for their welfare we are driving innovation tailor-made to the needs of a particular community instead of the one-size-fit all Bambazonke spirit of Harare. I believe the government fiscal policy must decentralise and at best devolve economic policy.
I believe that whilst in 1980 the world made money from breaking backs in agriculture, mining and manufacturing, the same way of the 1980s to make a successful economy may not ring true in 2014. There are more tools that companies and individuals can use to achieve success than at any time in history – more access to information, to capital, to mobility and to the most powerful tool available – education. Instead of driving the entire budget on the warped and archaic belief on “agricultural revolution” and “industrial revolution” as drivers of the economy new thinking points at other revolutions driven by service and technology must be considered. In any case, the land reform which is some form of agriculture revolution has not been successful at breeding new best-breed farmers who don’t cry each time for “government support”. As examples, Cuba is a net exporter of medical personnel and call centres are almost a preserve of India. Zimbabwe needs to identify its unique strategic advantages like in Porters Diamond model to have a successful national strategy and use the same to formulate successful fiscal policy.
I believe that because as few as three hundred thousand Zimbabwean benefited from the land reform, the reform itself was not fair and equitable. To bring equity it’s my considered opinion that a significant tax must be levied per hectare not only to spur and force productivity but also to increase the tax base. It’s not only the urbanites who must bear the wrath of these painful taxes. In addition because it’s just this one Zimbabwe, those who had land allocated to them pursuant to the “land reform” must give up their original rural areas land to enable resettlement of those who did not benefit from the land reform and are still farming in arid zones. Having a farm and rural home is a true manifestation of multiple farm ownership which is not only unfair but an evil medieval baboonish accumulation of wealth.
I believe a government need not tax its people until the very last cent but rather increase the tax base. It just goes without say that there are few economies that are successful without the express or implied blessing of western powers (ask Cuba, Russia and DPRK). It’s not likely Zimbabwe will change that, hence the country requires a permanent team that continually and consistently engages the west and world financial institutions. Purposeful engagement will drive investment and, to some extent, some freebies. Building Brand Zimbabwe is a fundamental quest to also be pursued. Government must ease the economic entry barriers and ease of doing business by learning of successes in that arena like Rwanda, Ghana, Mauritius and Seychelles.
I believe in synchronized thoughts, idealism, philosophies, laws and regulations. There is a reason why we rank lowest in attracting foreign direct investment – outwitted by the likes of Mozambique. The reason is simple; our laws and policies are not synchronized. To speak from one book, a clear written position on economic policy and laws is required in the model of “Investing in Zimbabwe”.

There are certainly issues of national importance that have arisen with the coming of a modernized society. Some would argue that there is no possibility that a person in 1980 could know what wonders would exist in 2014. While that is absolutely true, it is also true that a core principle will be just as true today as it was then. The basic concepts of life, liberty and the pursuit of happiness are just as relevant today, even with a different economic and societal context. If we accept that premise, the question becomes: what is the role of our government in today’s world? Should it be limited as in the Constitution or should it be an omnipotent, controlling entity as in Fritz Lang’s 1927 classic, Metropolis?Advertisement

My opinion is that there is even less reason today for overweening government than ever before. There are more tools that an individual can use to achieve success than at any time in history – more access to information, to capital, to mobility and to the most powerful tool available – education. If you are a poor in Zimbabwe, you can have free education from kindergarten through to college. In the past, if you had a weak back and a strong mind, you were doomed to poverty – the industrial revolution followed by the information revolution changed that. Technology has become the gun of contemporary economies – where the invention of the gun allowed the weak to compete against the strong, technology does exactly the same thing. Yet there are those who refuse these things because they aren’t delivered on a silver platter and spoon fed to them.
It is without argument that the government takes taxes from the corporates and individuals only to repackage them and redistribute them to “equalize” funding and in some cases, send the money to areas and people who were not taxed in the first place. Some people pay no income taxes and are the ultimate beneficiaries of Zimbabwe’s global tax bill like robbing Jon to pay Jane. All money earned by government is somehow all spent in Harare and its environs as if to say Harare is Zimbabwe and Zimbabwe is Harare.
We are experiencing the modern day version of “Atlas Shrugged” where the output of the producers is transferred to the non-producers. Karl Marx thought capital was a vampire, sucking the life blood of the worker. Marx’s ideals, the same ones promoted by today’s “progressives”, have created the real vampire, a remora-like, parasitic government bureaucracy that sucks the life-blood from the individual worker, the company he owns or is employed by and the national capitalistic economy. The indispensable man was, is and always will be the individual Zimbabwean.
The world is absolutely spot-on when they say Zimbabwe is now a dangerous environment for investment as, surely, it no longer follows an identifiable economic dispensation or common mantra. Its laws, regulations, pronouncements and people are at loggerheads. There are no candid conversations around the economy. All conversations are about power. Investors like certainty! It defeats a right thinking Zimbabwean why we fight and show dirty laundry to a potential bride.
Folks, this is serious stuff. Something in Zimbabwe has to give in. I’m far from what you would consider a radical and I don’t normally take an alarmist position, but I believe that the world of Zimbabwe is at a tipping point. A man cares little for ideology when he has no work and his family is starving. His allegiance is to whoever owns or allows ownership of the means of production. In our case, we are at the desperate point where we no longer have respectable or significant means of production. Zimbabwe is poor yet it is rich in rescources.We must do the right thing by pronouncing a radical new rethink when we present our fiscal policy
Brian Sedze is an author on Innovation, President of Free Enterprise Initiative and Chairman of Africa Innovation. He can be contacted on brian.sedze@gmail.com