Stakeholders Call for Efficient Tax Systems in Africa

By Dipo Olowookere

African governments have been advised to broaden and protect their tax bases so as to hasten rapid development across the continent.

This suggestion was made at a four-day workshop on protecting the tax base of developing countries, which took place in Addis Ababa, Ethiopia last Friday.

The programme was sponsored by the Italian government and participants were urged to use the new skills and knowledge gained at the event in implementing more effective and efficient tax systems that will ensure more resources are harvested for Africa’s development.

Speaking at the end of the technical workshop attended by revenue and tax experts from 23 African countries, Aida Opoku-Mensah, ECA’s Special Adviser on the Post-2015 Development Agenda, thanked Italy saying it was one of the very few developmental partners willing to support programmes that can give capacity to African governments to broaden and protect their tax bases.

She said it was crucial for Africa to have the necessary support so countries can continue to strengthen their potential and by extension improve their domestic resource mobilization which in turn aids the continent to fund their development, in particular the African Union’s Agenda 2063 and the United Nations 2030 Sustainable Development Agenda.

“SDGs and taxation, when you look at them you think they are poles apart but if we can support African countries to better manage their tax administration and to be able to increase their domestic resource mobilization, with the right governance strategy, it can lead to the implementation of the SDGs and lead to the reduction of dependency on aid and also put African countries in the driving seat in terms of their development priorities,” said Ms Opoku-Mensah.

She told participants, who received certificates at the end of the workshop, of a Memorandum of Understanding that will be signed by the UN Secretary General and the African Union Chairperson in January next year on the implementation of the SDGs and Agenda 2063.

“It is an important step because we are going to embed into this framework the work that has already started with you in these workshops to protect the continent’s tax base, going forward,” said Ms Opoku-Mensah.

Participants also discussed illicit financial flows (IFFs) through which Africa is losing an estimated $50 annually.

Curbing illicit financial flows, they agreed, would strongly bolster the continent’s efforts to fund her own development.

Giuseppe Sean Coppola, the Deputy Head of Mission at the Italian Embassy in Ethiopia, said his government will continue to support efforts to strengthen capacity in Africa for governments to broaden and protect their tax bases.

He said the availability of more resources to African governments can also improve their quest for regional integration, adding he hoped the training had been useful for participants so they can help protect their respective countries tax bases.

“Italy looks forward to continuing to engage with countries in the region and providing support to further strengthen their potential for domestic resource mobilization,” said Mr Coppola.

“This is one step towards achieving Agenda 2030 and it’s also instrumental to achieving the AU’s Agenda 2063 and we are very pleased to be contributing to that.”

Elene Belleti of the United Nations Department of Economic and Social Affairs (UNDESA), which ran the workshop, said the training was part of efforts to implement the Addis Ababa Action Agenda (AAAA).

“We need to tackle illicit financial flows because we cannot allow the leaking of resources from these countries to continue,” said Ms Belleti.

“We want to tackle tax evasion but on the other hand we cannot only focus on the illicit component. We also have to focus on how to tackle tax avoidance and how to create more transparent tax systems; how to protect the tax base from erosion; how to prevent profit shifting and this I hope is part of the knowledge you gained during the past few days.”

Participants during the four days discussed cross-cutting subjects looking at specific issues related to tax base erosion, how to draft legislation to prevent that, international practices, environmental and extraction industry taxation.