Addis Ababa/Marrakesh, Mar. 23, 2019 – Africa could increase tax revenue by as much as $72 billion or 4.6 per cent of gross domestic product (GDP) annually if comprehensive tax reforms are carried out, the Economic Commission for Africa (ECA) says.
This is one of the recommendations in the 2019 Economic Report on Africa (ERA) launched today in Marrakesh, Morocco.
Despite measures taken in the last two decades to improve tax administration on the continent, glaring inefficiencies still remain, showing potentials for raising additional tax revenue by closing obvious gaps, it says.
Increasing tax revenue generation in ways that are “equitable and sustainable” will enable African countries to achieve the Sustainable Development Goals and Agenda 2063, according to the Report, whose theme is “Fiscal Policy for Financing Sustainable Development in Africa.”
In the segment dealing with tax policy and performance in Africa, it also calls on governments on the continent to address the tax system holistically “to ensure that the tax system is progressive, neutral, fair and efficient, rather than to deal with each tax system separately.”
”In this way, governments may find additional opportunities for expanding the tax base, create more certainty for tax payers, and contextualize any global standards.”
The Report says to improve tax policy and performance in Africa will depend on more than tax efficiency but also on the provision of essential public services to reduce inequality and encourage economic growth.
To widen the tax base, it suggests African countries need to include more and more diverse payers in the tax net such as rural farmers and workers in the informal sector who have not yet been captured in the tax bracket. This should be done without harming the low income workers, the Report says.
In addition, it says the value added tax regulations needs to reduce policy gaps such as the excessive use of or reduced rates.
It also advocates improving governance in revenue collection by combating corruption and reinforcing accountability to reduce inefficiencies in tax collection.
Heard from allafrica.com/stories/201903230171.html
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