Monday, September 01, 2008

Africa's tax - exciting developments

We just received an e-mail from Mick Moore, who has been helping spearhead a new drive to focus on tax, more than aid, in Africa (and elsewhere.) We are reproducing his e-mail to us (copied to others) with his permission, though we've removed one or two bits that aren't especially relevant.

This follows our very recent blog highlighting how the IMF is waking up to tax, at last, an earlier blog about how this is starting to get traction at the United Nations, and a new book co-authored by Mick. Watch this space - this issue is growing fast.

Before reproducing Mick's message, we'd like to highlight a couple of parts, and to note that the communiqué from the meeting he mentions is available here.

"I am in partying mode at present."

and

"There was a very strong consensus around (a) the notion that taxation is part of state-building, not just a technical issue; (b) that domestic resources are better than aid; and (c) that this is an African agenda that will be taken forward by Africans (with donor support)."

and

"There is no doubt that it is the desire to free their countries of aid dependence that provides the African drive behind this. And the OECD interest is to enhance cooperation among African tax authorities to improve international tax cooperation."

The communiqué is well worth reading too. We could highlight many parts, but we thought we would single our this paragraph:

"We are concerned at the international findings on the issues of tax havens and capital flight. Billions of dollars per year have left the African continent between 1991 and 2004. These outflows are estimated at 7.6% of the annual GDP of the region and, in effect, makes African countries net creditors of donor countries. They also undermine African countries’ tax bases. While developed countries are providing ODA and some debt relief on the one hand, action by the international community is required to ensure that the potential tax base of developing countries is not undermined through tax evasion. We encourage the UN and the OECD to vigorously pursue their work in this area by promoting better international cooperation."

We like it! Now, here is Mick's e-mail:

Folks,

I would like to share with you news of great progress on the tax and development agenda for Africa. I have just attended ‘Tax Africa. International Conference on Taxation, State Building and Capacity Development’ held in Pretoria on 28-29th August. This comprised about 100 people, with very high level representation from tax authorities from 29 African Countries – the heads in many cases – and all the important aid and development agencies. (I was the only non-official).

The meeting was organised by the South African Revenue Service (SARS). Opening speeches were made by Trevor Manuel (Finance Minister of South Africa), Donald Kaberuka (President of the African Development Bank), and Pravin Gordhan (Commissioner of SARS). This was a major stage in a process that has been underway for some years, orchestrated in particular by a network of European donor staff working through the OECD DAC Governance Network, and then by the top level people in SARS and a handful of other (Anglophone) African Revenue Authorities – including two very impressive women, Mary Baine and Allen Kagina, who head the Rwanda and the Uganda Revenue Authorities respectively.

I attach the final communiqué from the meeting. In summary, both the communiqué itself, but even more the spirit of the meeting, amount to more than we thought possible. There was a very strong consensus around
(a) the notion that taxation is part of state-building, not just a technical issue;
(b) that domestic resources are better than aid; and
(c) that this is an African agenda that will be taken forward by Africans (with donor support).

The next step is that a steering committee of tax commissioners put flesh on the concept of an African Tax Forum. There is no doubt that it is the desire to free their countries of aid dependence that provides the African drive behind this. And the OECD interest is to enhance cooperation among African tax authorities to improve international tax cooperation. (The OECD has been strongly behind this, and the CEO of Her Majesty’s Revenue and Customs also attended.)
. . .
One good conference and one good communiqué are inputs, not outcomes. Many things could go wrong. The Francophones are marginal so far. In particular, there is a possibility that, even if the African Tax Forum functions well, the state-building aspects of taxation are neglected, and it focuses entirely on the standard, more technical, issues. But I am in partying mode at present. Thanks to those of you who have helped to make this possible.

Regards,
Mick

Mick Moore,
Professorial Fellow, IDS; and Director, The Centre for the Future State

Note: the Accra meeting on aid is this week. Hopefully the Africa Tax Forum will get good coverage there.

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