Dear URA, Finance, countries don’t grow because of tax collection

Let me say this upfront: countries grow from either doing business or stealing abroad.

Not taxation. Countries/governments make money to fund their public goods and services through either exploiting their human and natural resources or stealing abroad or both.

They establish public companies or private individuals – nationals not foreigners – to exploit their home environment or go steal and bring money back home. Companies such as IBEACO, Total, BP, Anglo-Gold, Dan Gertler International, Barclays, Glencore Plc., or individuals such as Filonardi, Rockefeller, among others, were directly supported by their home governments to go abroad and bring back money.

That is how countries grow. The failure to understand this dynamic is how countries fail. The point here is this: No country ever taxed its people into growth – or funded its budget through tax collection. North North and South Korea, Russia, Iran, the entire Middle East –including Saudi Arabia, Qatar, Oman, the Emirates – have all grown from exploiting their natural resources.

Not leasing them to foreigners. Government public companies or government-supported nationals exploit the environment and sell locally or internationally. China, India and most of South East Asia have grown from exploiting their natural and human resources – and scavenging abroad. Not from tax collection.

The United Kingdom, Germany, Belgium and all western Europe have developed by practically stealing from other countries. This is what colonialism – then and now – continues to give them.

The United States of America has grown through exploits in the Middle East and Africa. France without West Africa – former President Jacques Chirac told us – would be a Third World country.

One more time: no country ever collected enough taxes and turned itself around. It never happened – and will never happen. I need to start this story from the beginning by narrating the creation story of taxation – taxation as an idea; as a claim to belonging, citizenship. Not as money.

Perhaps this will help our tax authorities from killing homegrown initiatives and creativity with dangerous slogans such as “widening the tax base,” and “meeting tax targets”, or “taxes for development.”

These slogans are nothing but colonial, neoliberal death-traps that have sadly blinded us and kept us in a cycle of poverty. taxes as citizenship One of the most forgotten aspects of taxation – which was central to taxation in any polity – is that taxation was a claim to political citizenship.

The idea of taxation emerges as a requirement on members of a polity to stake their claim of belonging as valuable or important member of the polity. They had to do this by offering to the polity (Lord or Empire) anything of economic or monetary value.

Indeed, the Latin original taxare, translates as ‘valuing’ or estimating, and the Romans used the term to mean “fixing or estimating one’s worth,” according to law or custom. It wasn’t monetary value. Indeed, in traditional societies, farm harvests, handicrafts or labour in the fields were accepted measures of one’s value or stake.

In other cases, being a slave to a Lord where families – especially of newcomers – offered to serve a Lord in return for protection or integration. This is not European-style chattel slavery. Behind the slogans, “no taxation without representation,” was the understanding that taxation earned one the right not to just an opinion, but a stake in the ways in which the polity was governed and exploited.

Remember, only the rich used to govern; so, the poor, among other things, had to negotiate their right to participate in decision-making through staking anything with monetary value behind their claim.

Notice then that paying for the right to have an opinion (or more loosely, to vote) came to be coded as taxation. Thus, taxation became the language through which the taxpayers articulated their claims as important stakeholders in this polity.

Understanding that wealth is created ONLY through exploiting the land and labour – as Adam Smith would tell us in The Wealth of Nations – the taxpayers had earned their right to contribute to decision-making as regards this commonwealth, which meant exploiting the environment.

All taxpayers had an equal stake. This is what taxation meant. When people say, “I’m a taxpayer” or “my taxes”, they do not necessarily mean that they contribute money enough to develop the country. Instead, they are speaking to a stake in the ways in which the country is both governed politically and exploited economically.

Of course, with the volumes of the collection growing, money would be put to building things of the common good. But this was a secondary, derived function of taxation. Sadly, this understanding that “enough money has to be collected” to develop the country’s public goods and services has become the dominant interpretation of taxation.

So, tax collectors are finding more and more draconian ways to get money from an already impoverished people. In the process, they impoverish them more. This is exactly why supposedly progressive slogans such as “widening the tax base”, “controlling tax leakages” and “developing together” are simply dangerous.

In the end, starting or sustaining a businesses has become difficult because of taxation, among other things. Notice also that this dominant interpretation is actually a neoliberal rendering with origins from the colonial period.

It is meant to extract, not to develop. Head tax, hut tax, farm tax and all others were not taxes for development, but were forms of extracting value from the colonised. Relatedly, and perhaps more significantly, this interpretation and practice of taxation actually distracts people away from the more meaningful understanding of taxation, which relates to exploiting the land, and other natural resources.

At the end of the day, we have left the real money to develop the country in the hands of foreign exploiters. Imagine if the energy inside URA was channelled into Uganda Telecom, and UTL made the over Shs 30 trillion of annual profits after tax that both Airtel and MTN make from exploiting Uganda’s airwaves. (Please do not argue about the figure, just do the maths). Business, not taxation

Why am I labouring this story? It is undeniable that tax folks at the ministry of Finance and URA – possibly the entire state – operate on the false belief (on the insistence of IMF and WB) that taxes are the engine that run the country. This is not true.

Taxes will never be enough to fund any budgets. What has actually happened is that the country has crippled businesses, stifled innovation under misguided slogans such as “widening the tax base,” and “developing together.” This is disheartening.

Taxation has been not just profusely misunderstood, but also terribly abused. The sobering truth is that governments have to do business. Government has to create wealth from exploiting land and labour resources.

Again, I do not expect any African country to go abroad and loot. But our governments have to establish businesses – public and private – support and protect them to exploit our natural and human resources.

The example of the telecom sector I give above is just one example. Prof Ezra Suruma told us enough about owning our banks. Amidst crippling sanctions, if it wasn’t for Coffee Marketing Board, President Idi Amin would never have had any money to do the things he did in just eight years.

The point I am making is this: we will have to reconsider our understanding of taxation. It was never meant to be money for growing a country – but a gesture of commitment to a polity.

Europe and North America understand taxation in the original sense of the term. (This is why in most of Europe, your taxes are given back to you in cash if you become unemployed. Pension is an entirely different scheme). You collect money through owning and exploiting your environment.

yusufkajura@gmail.com

The author is a political theorist based at Makerere University.