Wednesday, September 22, 2010

Tax, not aid, is the key to development - OECD

We have said that headline many times. And we're pleased to see the OECD saying it. We've had our beefs with them, and we will continue to do so, but we like the kind of talk coming out of their development centre. The head of their development centre in Paris has just said:
"In 2008, the combined fiscal revenue in Africa reached over $400bn - 10 times the total amount of aid money flowing to the continent."
That ratio is just what we pointed to yesterday, although the numbers themselves are looking at slightly different things.
"The international community could play a key role. Saying that African countries should rely more on themselves is not the same as saying they should be left to achieve this alone. Development partners could support an international tax dialogue to voice and address Africa's concerns on issues such as tax evasion, fiscal havens and abuses by multinationals."
Yup. And there's more.


Anonymous Anonymous said...

USD 400 bn in tax revenue: How much of that was the government take from oil production, and how much reached the coffers of the government?

6:44 am  
Blogger Physiocrat said...

"Tax, not aid, is the key to development - OECD"

How true! But not the sort of tax that means that the gross labour costs to employers is getting on for double the real purchasing power of employees.

Nor, of course, taxes that are easily avoided or evaded. Latvia has had to learn a hard lesson on that score. Much of the economy, including food production and distribution, is on a very small scale, with family smallholdings producing, very efficiently, high quality fresh local produce. But because so many transactions are cash-in-hand and people can't be doing with masses of form-filling, the government is chronically short of cash.

The remedy is obvious.

12:58 pm  
Anonymous TJN said...

Anonymoyous you are quite right to point that out. It's quite difficult to separate out the two, in fact, and OECD data doesn't do it. We hope to bring more clarity on this shortly.

1:24 am  

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