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African countries urged to boost revenue through tax
African countries have been urged to boost their tax collections for sustainable revenue base.
Mr Logan Wort, Acting Executive Secretary, African Tax Administration Forum (ATAF), gave the advise recently at the opening of a meeting on multilateral agreement on exchange of information on boosting tax revenue, in Pretoria.
According to him “Although Africa is experiencing increased growth in trade and investment, the continent should boost its tax collection to ensure sustainable revenue base for development.”
ATAF was formed in 2008, with the objectives of promoting economic development, good governance and accountability as well as combating tax evasion and avoidance, among member countries.
Wort drew attention to Rwanda, which in year 2000, had a tax ratio to GDP as low as seven per cent but today had increased it to about 16 per cent due to the efforts of the Rwandan revenue authority.
He stated that collection of taxes on the continent had increased from an average of 17.9 per cent in year 2000 to an average of 20.3 per cent.
He said there was noteceable growth on the continent, adding that the challenge was how to stem the tide of tax and capital outflow from African economies.
“According to a report, illicit capital flight from developing countries is between $500 billion and $800 billion per annum,” he noted.
Wort said the exchange of information was crucial in the development of African economies because it would allow the continent’s revenue authorities to commence work on gathering information that might be relevant to the legal processes for taxpayers in different countries.
“Clearly, we must aim to at least increase our revenue by another four per cent of GDP in the next five years to create some form of sustainable revenue collection and growth in domestic revenue,” he stressed.
He said the major challenge was to secure more sustainable revenue sources and in particular, broaden the tax base while optimisng administration and our service to taxpayers on the continent.
An increase in the mix between Vat, indirect tax, company tax and individual direct tax was necessary in order to have a sustainable stream of revenue in African countries,” he said.Share