• December 17th, 2018
Login / Register

Africa must improve its tax systems – Alweendo


Rundu There is a great need to improve the efficiency and effectiveness of tax systems in many sub-Saharan African countries, says Minister of Economic Planning in the Presidency and Director General of the National Planning Commission Tom Alweendo. Alweendo made the remarks when he addressed the four-day Africa Redemption International Conference (ARIC) that ended here on Friday. The conference deliberated on a number of issues that prevent the continent from emerging from poverty and was attended by participants from South Africa, Zimbabwe and Zambia, among others. Running under the theme ‘Shifting Mindsets from Poverty to Prosperity’ the conference was hosted by Rundu Unam Campus and the Faculty of Economics and Management Sciences. “As we all know one of the most important domestic resources to finance development is taxes in various forms. Most importantly, taxes and other government revenues fund the provision of essential public goods, such as education and health services, infrastructure development and maintenance, law and order, and efficient public administration. “However, most African countries collect only a fraction of potentially available taxes. While some countries, such as Namibia and Botswana, had high tax revenue to GDP ratios of 29 percent and 35 percent, respectively in 2015, in countries, such as Chad, the tax ratio to GDP is a mere four percent. “There is, therefore, a need to improve the efficiency and effectiveness of the tax systems in many of our countries,” he said. According to Alweendo, one way to improve revenue collection is through the establishment of a semi-autonomous revenue collection agency. He said there is evidence that suggests such an institution would be more able to attract and retain high quality staff. A single revenue collection authority may also be more efficient, as it integrates all tax functions into one entity. “A revenue authority model is also attractive, because locating all tax administration functions in one autonomous entity facilitates much-needed reforms to achieve higher efficiency in tax collection,” he noted. Alweendo said improving revenue collection is not only about increasing the amounts collected, noting that, for example, when a country has a tax system that is too high and burdensome for taxpayers it encourages tax evasion and acts as a disincentive for private sector companies to enter the formal sector. “Rather than being regarded purely as a means of raising revenue for the State, taxation should, therefore, be seen as an embodiment of the relationship between the State and society,” he said, adding that improving the tax system and making it fairer and more administratively convenient can help reinforce State legitimacy and nurture a taxpaying culture. Alweendo further said one of the obstacles that impede Africa from leveraging domestic financial resources is the illicit flow of funds from the continent. “According to the High Level Panel on Illicit Financial Flow from Africa, led by President Thabo Mbeki, Africa is estimated to be losing more than US$50 billion annually. This is a substantial amount of resources – about two percent of the continent’s total GDP in nominal terms,” he observed.
New Era Reporter
2016-10-27 09:54:21 2 years ago

Be the first to post a comment...