Ignoring the Politics of Tax in Africa
Sep 09, 2008
Commissioners and Senior Officials of Revenue Administrations of 26 African countries attended a conference on “Taxation, state building and capacity development in Africa” from 28-29 August in Pretoria. Sadly the conference papers don’t appear to be available on-line, but read the resolutions here and see IDS’s report here.
At the end of two days those present, reached some laudable resolutions including:
- that the domestic tax base is a key mechanism for developing countries to escape aid or single resource dependency.
- that effective tax systems can reinforce government legitimacy through promoting accountability of governments to tax-paying citizens, effective state administration & good public financial management.
They also expressed concern about international findings on the issues of tax havens and capital flight. Rather idealistically they argue further that “one of the most pressing issues facing the continent is to embark on a path to free African countries from their dependence on foreign assistance and indebtedness through the mobilization of domestic tax resources. ” In response to these and other challenges they propose the launching of a new initiative that would primarily focus on capacity building in African tax administrations.
The fact that the conference made the link between governance and taxation is laudable. This begins to move us beyond simplistic technical approaches to tax reform. It is however disappointing that the conference did not dwell on the overtly political aspects of tax reform.
Tax systems are not just weak because of a lack of capacity, but also because powerful people in poor countries benefit from poor tax systems
. Even in the much-quoted South African success story, business tycoon Brett Kebble
managed to avoid filing a valid tax return for more than 10 years. If we are going to reform tax systems in Africa, we will also need to reflect on how to get powerful political interests to support such a reform program.
Admittedly this is not an easy task, but we ignore it at our peril. What is clear from a number of countries is that tax reform needs high level political commitment from government. So a good first step might be to invite the politicians and rich business people to these conferences as well.
What are your ideas for how to get the rich and powerful to pay their taxes?