Malawi’s most celebrated businesswoman and overnight billionnaire, Triephonia Bender Mpinganjira, has shocked the nation following revelation that she evaded paying taxes before proceeding to obtain a court order stopping the Malawi Revenue Authority (MRA) from investigating her.
Madam Mpinganjira is the owner of Diplomats Car Hire, which is reportedly embroiled in a web of corruption and tax evasion, according to local media reports.
The revelation is deeply troubling considering that madam Mpinganjira, wife to businessman Dr. Thomson Mpinganjira, is also celebrated as a philanthropist and role model to girls and young women in Malawi.
Tax evasion is a criminal offence, which comes in various forms. It can be fairly basic, like deliberately failing to declare everything you earned. This could be money from cash transactions, rental income or side jobs.
It can also be immensely complicated, especially some of the tactics employed by the super-rich.
For one of the poorest countries such as Malawi, tax evasion can be a serious threat to development because it reduces government revenue, exacerbates income inequality, and undermine governance, all of which have adverse effects on the economic development of grassroots communities.
Taxes are paid for the government to secure the functioning of the market and achieve various public goods and services sustaining society. They are payments to the state on behalf of society. And as Thomas Piketty writes: ‘Without taxes, society has no common destiny, and collective action is impossible.’
Tax evasion can redistribute the tax burden, making it harder for the government to fund its budget. This can lead to fiscal deficits and a need to borrow money from other countries or financial institutions.
Tax evasion can lead to inflationary pressures because it increases the amount of money in circulation without a corresponding increase in goods and services.
Simply put, tax evasion leaves underprivileged citizens without the state services they need most.
Malawians are therefore baffled to imagine that ‘successful businesspersons of the Mpinganjira calibre should be evading payment of taxes, an action, which suggests that she is not willing to contribute a fair share to the society.
And this begs questions on the sincerity, integrity and morality of the charity work she is spearheading. Should Malawians conclude that Mrs. Mpinganjira is using her charity work to avoid payment of taxes to the government?
By evading tax, is Madam Mpinganjira denying Malawians the services government could have provided to them if she paid taxes?
What is more demoralizing is the fact that Madam Mpinganjira has obtained a court order stopping the Malawi Revenue Authority (MRA) from conducting a search on her property and making necessary calculations on what is due to the government.
In so doing, is she not frustrating government efforts to improve the social welfare of the citizens?