By Judith Ugwumadu | 24 February 2014
Africa’s tax systems must be reformed and strengthened in order to curb soaring inequality across the continent, campaigners said today.
Examining income inequality in eight sub-Saharan countries – Ghana, Kenya, Malawi, Nigeria, Sierra Leone, South Africa, Zambia and Zimbabwe – Christian Aid and the Tax Justice Network Africa found ‘clear evidence’ that growth was taking place at the expense of poor people.
Their Africa rising? Inequalities and the essential role of fair taxation report noted that tax is one of the most potent tools governments have to address inequality, but in many African countries these systems do not fulfil that function.
‘Inequality reflects the inability of governments to tax the proceeds of growth, either because so much is given away in corporate tax breaks, or has escaped offshore in to tax havens,’ said Alvin Mosioma, spokesman for Tax Justice Network, Africa.
‘Until tax dodging is tackled effectively, national and internationally, and illicit finance flows from the continent halted, economic inequality will continue to rise.’
The report examined the relationship between national taxation systems and international tax issues. Weak tax authorities with limited expertise and resources to tackle tax abuse were found in each country. ‘Poor enforcement means the continent’s high net worth individuals often evade tax,’ the report said.
The campaigners also noted that African governments have struggled to introduce new taxes on income, wealth and property, often because of the resistance of the private sector and elites to reform.
Christian Aid and the Tax Justice Network Africa urged the international community to take on more responsibility for tackling increased economic inequalities and the shortcomings of taxation systems and public finances in sub-Saharan Africa.
Mosioma added that a forthcoming report from the United Nations Economic Commission for Africa’s High Level Panel on Illicit Financial Flows offered an opportunity to recommend practical ways to address the problem.
He said: ‘The panel has been looking at the scale of illicit wealth leaving Africa and investigating what can be done. This could not be more critical. Speaking with a unified African voice would have a huge impact in advocating for global change.’
Sophie Powell, Christian Aid’s Africa policy and advocacy manager, added: ‘African governments at present are finalising their position on the framework that should succeed the Millennium Development Goals at the end of 2015. They and other governments globally must prioritise the building of fair taxation systems to address inequality at its core.’
