BURUNDI: Pro-poor Fiscal Policies Will Protect Citizens From Adverse Impacts Of Coronavirus

BURUNDI:  Pro-poor Fiscal Policies Will Protect Citizens From Adverse Impacts Of Coronavirus

By Appolinaire Nishirimbere

As everywhere else in the world, the COVID-19 pandemic is causing an unprecedented financial crisis and exacerbating the crisis of wealth redistribution, and those most affected are women and vuerable groups, thus widening inequalities. Economic experts and civil society activists have been sounding the alarm in recent years, all pointing to the need for tax reform to ensure an equitable distribution of resources. Clearly, it is difficult to address the current economic and financial issues without fiscal justice. What is the situation of the epidemic in Burundi and its impact on social inequalities?

The situation of COVID-19 and fiscal justice in Burundi

With 94 cases to date in Burundi according to the latest official figures from the Ministry of Health and Fight against AIDS, the COVID-19 pandemic has now reached Burundi and its impact can be devastating. In our increasingly interconnected world, no country is truly able to escape the momentum of global change and remain unaffected by the COVID-19 epidemic. Although in the North, the situation appears to be improving; according to the World Health Organization (WHO), it continues to worsen in the Southern and developing countries. With their consumer budgets mainly oriented towards second-need services such as security and defense, the latter find themselves unable to purchase the medical equipment needed to effectively detect, monitor and resist the spread of the new coronavirus without external aid or debt.

Located in the heart of Africa, Burundi is a developing country, deeply impoverished and with insufficient, underfunded and often inaccessible basic public services. Its budgets are generally consumer budgets. For example, the 2018/2019 Revised General State Budget is much more of a consumption budget and not an investment budget because the projected domestic resources (FBU 864.9 billion) could not cover current expenditure (FBU 881.1 billion). It would, therefore, be difficult for the Government to carry out an investment project using its own funds because the current balance excluding grants and other exceptional income is negative (FBU -60.9 billion); the overall balance with grants of the 2018/2019 budget being negative; reaching FBU -163.5 billion, i.e. 13.2% of total resources (very slight decrease of 0.2% compared to the initial 2018 forecasts).

Financing and improving working conditions in some public sectors such as health, education and trade could potentially save countless lives. It should be pointed out that, although the borders have been closed, Burundi is not currently under containment and the movement of people and goods is normally carried out without fear of spreading COVID-19.

Although the Government of Burundi has already taken some measures to halt and prevent coronavirus; one wonders what the Government intends to do about the post-crisis situation, which could be financially disastrous for many countries. The COVID-19 pandemic will have been a gauge that should challenge leaders on their priorities.

Levels of illicit financial flows (tax avoidance, tax evasion, corruption, etc.) have left many countries without resources to finance public services. As a result, health systems in Southern countries including Burundi are also woefully underfunded, with public health workers lacking personal protective equipment such as masks, gloves and isolation centres without ventilators for patients in critical situations. Millions of people in the countries of the South also lack access to adequate health care and live in overcrowded informal settlements where social distancing is impossible, many also lack access to clean water for good handwashing, which is now a privilege for some in society.

With the looming financial crisis, Burundi, like many other developing countries, will no longer have to rely too much on foreign aid and debt. Instead, they must reorient their priorities and mobilize more domestic resources to finance their development, especially basic public services. This pandemic will have taught us that the priority for our countries must be the equitable redistribution of wealth towards basic areas such as health, education and agriculture, which vulnerable and marginalized populations such as women and children need.

In particular, Burundi has just elected its new leaders. The latter should urgently address tax reform to make it more pro-poor, mobilize domestic resources and ensure their equitable redistribution, while effectively combating illicit financial flows (tax avoidance, tax evasion, capital flight through transfer pricing, corruption, etc.) that are bleeding our continent, and hence Burundi, to heal the economic ills of the past.

What demands and solutions?

First, LARGER AND LASTING INVESTMENTS should be injected into basic public services. In response to the spread of the coronavirus, more investment is needed in universal social protection systems and quality publicly-funded universal health services, especially those services that are being massively reduced as a result of this pandemic. As a long-term measure, the government must also ensure that human rights organizations and movements in all their diversity are fully engaged in meaningful consultation and participation in all response and recovery measures and plans.

Second, the Government should TAX THE RICH. To tackle the economic impacts, Burundi, like other governments, must use all available resources, including taxing big business and the rich: they must pay their fair share to avoid the highest costs being borne by those least able to pay. In short, it is high time to tax the rich and to tax multinationals where they create wealth.

Thirdly, the Government should also REDUCE THE POVERTY BURDEN. Some tax measures as an emergency response to encourage liquidity, especially for women and vulnerable groups, including for governments to delay the filing of tax returns, institute tax exemptions. The government should make an inventory of businesses that have been affected by the pandemic, especially small importers who traded from abroad (Uganda, Tanzania, Zambia, Dubai, China, etc.), and temporarily reduce their tax burden until they recover.

Fourth, we must TAX THE PANDEMIC PROFITERS. In the medium term, the government should think about solidarity or corona taxes for companies that make huge profits during this period; for example, digital companies. Extreme inequality is out of control. According to OXFAM International’s report on global inequality, the richest 1% of the world have more than twice as much wealth as 6.9 billion people. There is enough wealth in the world to guarantee basic human rights for all, including access to public services such as health care, water, education, social care and social protection.

Finally, SPECIFIC TAX MEASURES ARE NECESSARY TO PROTECT CONSUMPTION OF THE LOWEST INCOME, such as VAT reductions. In the post-crisis period, Southern countries like Burundi will need to increase their tax/GDP ratio, a measure of a country’s tax revenue relative to the size of its economy, which is currently very low and has not increased in recent years. The focus should be on property taxes, the flourishing mining sector, wealth and the use of these revenues to invest in social protection and social security systems, especially for women and other vulnerable groups.

According to the womankind blog of my colleagues Caroline Othim of the Global Tax Justice Alliance and Roosje Saalbrink of Womankind Worldwide, “this is a time for transformative change that addresses the structural flaws that continue to accumulate resources in the hands of the few. It is time for systemic reforms of redistributive justice, including progressive tax reforms, where the wealthy elite and multinational corporations pay their fair share. It is time to create alternatives to the structure of the current economic model that are fit for purpose and to reinvigorate the role of the state. A fair feminist economy would reduce the time burden of unpaid work, ensure secure incomes, fiscal justice with sufficient public resources to guarantee maximum levels of health care, promote women’s security and their ability to engage in political activities.”

In view of the global financial situation caused by COVID-19, and since the pandemic is pushing the redistribution crisis at an excessive speed, we need adequate resources and we will achieve this through tax justice: reforming the tax system by making it pro-poor.

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Just the sort of (welcome) madness one would expect from Branko et al - congratulations and good luck! twitter.com/dailymav…