Archive for February, 2012

Taxpayin’ Blues in Zambia

What better way to celebrate the leap-year than a return to blogging! And what more appropriate a subject to tackle on such a mystical day than… the broadening of the tax base in Zambia!

I was quite surprised to see it featured today on the Guardian, and then less surprised to see that it was dealt with quite haphazardly. I’m glad to see its getting coverage, but it seems to me to be conflating two very separate issues.

1) the transparency (or lack thereof) in dealing with multinationals.

2) the incorporation of the informal sector into the tax system.

Both are important for a democracy, but both are very separate. They are linked, however. If the elite can no longer sustain itself by entering into underhand deals for the nation’s copper, taking bribes so that MNCs don’t have to go through official channels, then they don’t need to raid public coffers to achievement private enrichment. If there is transparency, these deals need to go through official channels, and corruption becomes more obvious, and the elite is more easily held to account. Mineral wealth is related to the underdevelopment of the tax base itself as well. If the elite can live off the rents gained from mineral wealth, then it doesn’t need to tax citizens. If citizens aren’t being taxed, they less easily enter into bargains into the elite over policy (no taxation without representation, etc etc). If there is no bargaining with the elite for rights… then there are no rights.

Clearly Zambia is different to this abstracted case. There is a measure of democracy and rights, but off the strength of a civil society based around trade unionism (based around mining, from which the elite might derive rents…) not around general, broad-based taxation. I’m not saying that the income tax cuts of Sata are bad for democracy; far from it. But with emphasis on the size of the informal sector, the issue becomes stark. Informal sector GDP as a percentage of formal GDP has averaged 47.7% for the period 1973-2010, and forgone revenues amount to 7.7% of GDP which could finance 42% of the total national budget.

Hopefully from the above you can see that general taxation is a different business to the taxation of MNCs.

This is where we can see the Guardian article getting very confused. It starts by highlighting the issues in taxing MNCs, then realises that there are broader issues in taxation and development and clumsily tries to address them without making any distinction between the qualitatively different approaches that these two issues need. They get two experts, Messers Besley and Di John to comment on the broader issue of taxation, which they do, saying perfectly sensible things, but edited in a way that is completely incongruous to the rest of the article, leaving the implication, for example, that Glencore might be drawn into the formal sector through a microfinance initiative. Eh?

The tax system in Zambia needs an overhaul. However, the issues with it are many, and need different approaches, and different lines of argument. If you’re going to try and address them all in one go, you might benefit from taking a moment to make distinctions between them. Otherwise you might end up with a bit of an incoherent mess, no matter how well intentioned you are.

to my readers

I’m afraid my blogging this week will be somewhat intermittent.* Work, more work and a trip to Manchester to film a certain TV show mean something has got to give, and, for the meanwhile, it’s gonna be the blog. It should be back up to regular order by next week.

In the meantime, let’s just hope I don’t do this.

*The regular reader may decide for themselves if it is also, on occasion, erratic.

Santorum’s disorganisation hinders, not helps, him

So a friend alerted me to the existence of an article on ABC; somewhat misleadingly entitled “Rick Santorum’s Way to Win? Run a Campaign on a Shoestring budget.” It’s a nice story; you really feel empathy characters, and you’d be rooting for him if it was a movie and Santorum was playing the role of Chris Rock. Alas, if Rick does win, it will be despite his chronic lack of organisation, not because of it.

There are several reasons for this. Firstly, he plain isn’t on the ballot in Virgina or Indiana. That’s just giving delegates away.

Secondly, the translation of primary seats into delegates isn’t simple. Jonathan Bernstein looks at the extreme case here, but you only need to imagine a scenario where the outcome of the aggregate of primaries is not clear-cut either way (for example, Santorum wins Michigan, Romney wins Arizona, Super Tuesday is a split with Southern states generally going Rick’s way but others going Mitt’s) and you see how if Mitt unambiguously leads in delegates then his nomination becomes swiftly more palatable than in JB’s scenario, where Santorum is adjudged clearly to have “won” the primaries.

Thirdly, he has no endorsements! 2 Representatives, no Senators, no Governors? For a 12 year senator to have no endorsements from his colleagues… Well it’s like a former House Speaker seeing all his colleagues endorse the other guy. Romney has over 60 House endorsements, 14 Senators and 9 Governors. Including, as of the other day, the Michigan governor Rick Snyder.

I’m not saying Santorum can’t win primaries, but employing a pollster (to know which primaries are worth targeting), getting your name on the ballot, having a Campaign HQ so colleagues take you seriously… These are little things for any Presidential candidate, and they could have a big impact. And to ignore them is just to shoot yourself in the foot.

Looking ahead to elections in Angola

Angola’s elections are still a way off, but are well worth keeping your eye on. Several factors make it an interesting and intriguing year for Angola.

a) The possibility of succession, either between parties or (more likely) within the ruling MPLA. There has been a lot of speculation as to whether Africa’s second longest serving ruler, President José Eduardo dos Santos, is looking to hand over to a successor (likely former Sonangol head Manuel Vicente). Sources within the MPLA on Saturday claimed that Dos Santos was looking to run for President again, with Vicente his VP candidate, and this, if true, confirms many onlookers’ thoughts; Vicente will be the guy, just not quite yet. Whether we’ll see any internal party unrest, as Dos Santos backs Vicente ahead of others, remains to be seen, although I’ve been hearing rumblings of it since the start of the year so it may well be a fait accompli by now. Also worth bearing in mind the implications of succession: and it always has implications. While the head of Sonangol is pretty well placed to master of patronage networks necessary to run a country like Angola, he will always bring something different, and quite possibly disjunctive. And as we saw in Zambia with Banda, seemingly secure regimes sometimes don’t last long with new leaders.

b) Opposition. There have been violent protests but they lack organisation. This excellent article by Louise Redvers illustrates the problem that dissidents such as Rafael Marques have. On the one hand, he has a point when he says that “in Angola’s case, what we are seeing is a president who has been in power for three decades and is nearing the end of his time, which is making people think more carefully about their own interests. This is what has happened in North Africa.”

On the other hand, hopes of an Angolan Spring seem wildly optimistic, as the corrupt structures that people protest against are the same ones which fragment opposition, rendering it difficult to organise. Electorally only the MPLA really has a national base, and extra-electorally… well, I don’t think there’s an appetite for a return to civil war.

c) Oil and the International Realm

We’re seeing an increasingly assertive Angola on the international stage. The same oil revenues that insulate the regime from domestic pressure also can patronise their former colonial masters. With Iran threatening to cut oil supply to Europe, one can expect oil price spikes to further secure the governments position. The MPLA have signed accords with Russia, Cuba and Vietnam recently, staking out a international base of allies. As the stakes are raised, will the government feel more secure? Or might opposition movements be emboldened by the bigger prize?

I feel at this stage that the former is vastly more likely than the latter. But that’s just me. As always, suggestions/input welcomed.

Assessing Rick Santorum’s chances and GOP elite tactics

This has been a few days in the offing, which I apologise for – a burgeoning cold, a trip to London and work have all conspired against me this week.

Having said that, having a few days to reflect on Rick Santorum’s surprising wins in Colorado, Minnesota and Missouri probably isn’t a bad thing, because the shock factor from those wins can wear off. On the flipside, Romney may have won Maine, but Santorum was barely competing there, so the question remains: what are his chances?

Still slim, I reckon.

Case in point: I enjoyed this on the Guardian…

Santorum ruined that, easily winning Minnesota and Missouri and finally taking Colorado after the result see-sawed back and forward during the count. Santorum won by 40.2% to Romney’s 34.9%. To illustrate the scale of the defeat, Romney had won Colorado just four years ago by 60% to his then rival John McCain’s 19%

On the one hand it does illustrate the scale of the defeat; on the other hand, it also illustrates that you can lose by as much as 40% in Colorado to a rival candidate and still bag the nomination…

It depends a lot on whether the Republican elite rally around Santorum or not. JB notices that they didn’t do so first time around, and they might be unlikely to do so again, concluding “it’s a long way from a very, very good night to actually becoming a plausible nominee”. But what are these ethereal elite actors up to, if they won’t back Mitt (perhaps in search of a not-Mitt candidate), but then also won’t back not-Mitters?

Perhaps they’ve realised that the best not-Mitt candidate is, in fact, Mitt.

I love Jonathan Chait’s not on the whole affair here. As he puts it:

 … you’re not seeing Party leaders try to rally around Santorum as the alternative to Romney. Instead they’re trying to jack up Romney for more policy concessions.

It’s the ultimate “if you can’t beat them, join them” tactic, except you’re joining “them” (being Mitt) on the condition of attaching lots of riders and pinning him down to positions that he wouldn’t otherwise take. And he’s suffering for it in the polls: and I don’t mean against Santorum. Earlier I discussed how Mitt will most likely be a moderate president. This was due to structure, necessity, inclination, all sorts.

His party, however, are trying to turn him into a radical nominee. And if they’re successful, he might fail to become a president at all: moderate, radical, or otherwise.

Congo election article on Think Africa Press: “An Eerie Calm in the DRC”

The good people of Think Africa Press have published a (slightly abridged) version of my series of posts on the DRC elections here.

It was written a while ago but I don’t think you can tell, and they did away with the temporally sensitive references to the parliamentary elections (which was wise).

For the original posts (in case you missed them…), here is your starting point.

Qualifying “historically poor performance”

About a week ago I wrote the following:

…the whole furore about Stephen Hester’s bonus is that his bonus did not seem to be linked to the historically poor performance of RBS.

The validity of this sentence hinges on the sense of the word “historically”. I meant it in the sense that “in the past, RBS has performed poorly”, and indeed I added in the word on proof-reading to try to absolve Hester of responsibility for what happened before his time. The great irony is that, in dealing with the fallout of a historically significant mismanagement of a large bank, Hester probably does deserve a reward. However, that doesn’t mean what I said above is wrong, because it is the bygone performance which is still of public salience.

All of which made for a very interesting interview this morning with Hester on the Today programme. He came across as pretty personable, and when he recounted the stresses of trying to get RBS back on an even keel, you couldn’t help but feel sorry for the guy. If we’re talking about models of payment where you get rewarded for good performance, one has to think: is it fair that he gets punished for his predecessors mistakes?

…and then one has to think, if I was on a salary of over a million quid a year, yes, I could probably deal with that “punishment”.

Because ultimately, before we get the violin out and play a mournful tune, the relative/absolute distinction is key here, you can’t help feeling. Yes, it’s unfair that he isn’t being rewarded for his good performance. Yes, it’s unfair that he’s being punished for the mistakes of others, and being found to be guilty by association with the name “RBS” when he’s done good things there. But, in the words of James Naughtie, why isn’t £1.2 million enough?

Now all this isn’t at all a way to have a dig at Hester. He said he agreed he should pay taxes, that he wasn’t a politician and that any structural changes to the industry should happen at the political level. But the point remains that in other jobs, when we do a good job, we get paid a salary, and it’s a darn sight less generous a remuneration than that. It’s not in any way a personal gripe I have with “bankers” but more a sociological observation; in such a situation, if the government has stepped in to support an institution that has behaved irresponsibly, million pound bonuses just won’t be acceptable. And that’s regardless of how well you’re doing your job.