A virtual coffee-break on the Fair Tax Monitor and its role in advocating for tax reforms in Zambia 

A tool to assesses the progressiveness, transparency, and accountability of national tax systems and how it was applied in the Zambian context

On 9 December 2021, the Addis Tax Initiative (ATI) Secretariat organised a virtual coffee-break on the Fair Tax Monitor (FTM) tool and its practical insights derived from the experiences applying the FTM in Zambia. The event participants included tax policymakers, practitioners, and researchers, as well as fair and equitable tax advocates. The dialogue on FTM was spearheaded by two brief presentations given by Ms. Chenai Mukumba (Tax Justice Network Africa (TJNA)) and Mr. Martin-Brehm Christensen (Oxfam Novib).

The first presentation, by Ms. Chenai Mukumba, started with a brief introduction to the FTM framework followed by the Zambian experience. The Fair Tax Monitor (FTM) – jointly developed by Oxfam and TJNA in 2014 (and continuously revised) – is a tool which assesses the progressiveness, transparency, and accountability of national tax systems. Emphasising the role of local partners, Ms. Chenai Mukumba highlighted that FTM is a learning journey and aims to build the knowledge base to shape tax policies. The project’s objective is to build fair and progressive tax systems resting on (i) enhancing the capacity of local partners – such as civil society organisations (CSOs) – by building the necessary understanding and evidence to hold governments accountable, and (ii) influencing policymakers and mobilising the political will to pursue progressive policy changes. The FTM-analysis is structured in six cluster topics

  • tax burden distribution and progressivity,
  • revenue sufficiency and IFFs,
  • tax competition and corporate incentives,
  • effectiveness of tax administration,
  • government spending, and
  • transparency and accountability.

Based on a country’s performance on each of these areas, its national tax system is scored from 0 (unfair) to 10 (fair).

FTM-analysis, to date, has been carried out in over 15 countries and is continuously evaluating and expanding its research framework. Currently, it is deepening the methodology to analyse and advocate for the inclusion of a feminist perspective in tax policy. Here, Zambia is a pilot project country. With its debt level surpassing 70% of GDP, domestic revenue mobilisation (DRM) has become the Zambian government’s priority. Building on the 2020 Zambian general FTM-report, the upcoming 2022 FTM-report will provide a gender analysis of the country’s tax system, covering relevant data from the past 10 years. Alongside the evaluation, the analysis offers recommendations and policy proposals to, among other things, enhance the progressivity of income taxes and improve the tax-to-GDP ratio in a gender-responsive way. Some recommendations from the 2020 Zambia FTM-report, such as the increase of the tax-exempt threshold and higher investment on education and health have subsequently been introduced by the Zambian government.

In the second presentation, Mr. Martin-Brehm Christensen discussed the journey of the FTM projects and highlighted upcoming FTM areas of focus. Pointing to the expanded reach of FTM assessments, Mr. Martin-Brehm Christensen touched upon upcoming FTM-research into the extractive sector, feminist taxation as well as wealth taxes and climate and green taxes. In Mozambique, a pilot FTM-analysis is looking into the extractive industry to enhance the understanding of focus-areas such as ‘transparency’, ‘revenue adequacy’, and ‘social and environmental costs compensation’ in this sector. In the case of wealth taxes, despite potential challenges – such as availability of information and proxy variables exploration of pilot countries, such as Nigeria and Kenya, is taking place so as to carry out a FTM-assessment focusing on wealth taxes.

In the open discussion, a range of issues and questions were raised by the participants. Addressing questions on the public accessibility of the FTM reports and methodological documents, Mr. Martin-Brehm Christensen and Mr. Ishmael Zulu (TJNA) confirmed that both FTM-reports and methodological details are publicly available and shared with participating countries. Furthermore, details about the FTM’s Common Research Framework (CRF) were discussed, including how scoring the performance of national tax systems enables temporal analysis of countries as well as comparison of weaknesses and strengths between countries, although it does not offer a tool for direct cross-country benchmarking. Responding to questions raised on the inclusion of the expenditure side in FTM assessments attested that FTM-reports devote one chapter to this topic. Moreover, the role of CSOs in the Zambian case was referenced to highlight the relevance of FTM in shaping reforms on the ground. Finally, the fact that FTM-reports have fostered dialogue and constructive collaboration between CSOs and national revenues authorities was also positively received by participants.