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Tax Reform

Weekly wire: The global forum

Roxanne Bauer's picture

These are some of the views and reports relevant to our readers that caught our attention this week.

Even in Era of Disillusionment, Many Around the World Say Ordinary Citizens Can Influence Government
Pew Global

Signs of political discontent are increasingly common in many Western nations, with anti-establishment parties and candidates drawing significant attention and support across the European Union and in the United States. Meanwhile, as previous Pew Research Center surveys have shown, in emerging and developing economies there is widespread dissatisfaction with the way the political system is working. As a new nine-country Pew Research Center survey on the strengths and limitations of civic engagement illustrates, there is a common perception that government is run for the benefit of the few, rather than the many in both emerging democracies and more mature democracies that have faced economic challenges in recent years. In eight of nine nations surveyed, more than half say government is run for the benefit of only a few groups in society, not for all people.

Media Development and Countering Violent Extremism: An Uneasy Relationship, a Need for Dialogue
CIMA

This report looks at how media development practitioners are reacting to the rise of the Countering Violent Extremism (CVE) agenda, and its growing influence on their field. This influence is the cause of concern, not only because practitioners of CVE and media development have fundamentally different worldviews, but because the CVE agenda is seen to pose serious risks for southern media houses and the organizations that support them. Still, these risks are unlikely to be addressed without coordinated efforts from both sides. However uneasy the relationship, a dialogue between CVE and media development is needed.

How to Fix Fragile States? The OECD Reckons it’s All Down to Tax Systems.

Duncan Green's picture

‘Over-generous tax exemptions awarded to multinational enterprises often deprive fragile states of potential revenues that could be used to fund their most pressing needs.’ Another broadside from rent-a-mob? Nope, it’s the ultra respectable OECD in its Fragile States 2014 report.

After years of growth, aid to fragile states started to fall in 2011, so the report centres around an urgent call for OECD member states to help their more fragile cousins find a post-aid arrangement that funds essential state functions and builds the ‘social contract’ with citizens.

The key is a shift from aid dependence to ‘domestic resource mobilization’ (taxes and natural resource royalties), currently averaging a feeble 14% of GDP across fragile states and far too dependent on royalties from oil, gas and mineral extraction. Foreign direct investment (factories, farms etc) is generally low in volume and volatile.

Africa’s Tax Systems: Progress, but What Is the Next Generation of Reforms?

Duncan Green's picture

Taxation is zipping up the development agenda, but the discussion is often focussed on international aspects such as tax havens or the Robin Hood Tax. Both very important, but arguably, even more important is what happens domestically – are developing country tax systems regressive or progressive? Are they raising enough cash to fund state services? Are they efficient and free of corruption? This absolutely magisterial overview of the state of tax systems in Africa comes from Mick Moore (right), who runs the International Centre for Tax and Development (ICTD). It was first published by the Africa Research Institute.

Anglophone countries have led the way in reforming tax administration in Africa, considerably more so than their francophone peers. The reasons for this are numerous. Networks of international tax specialists are based mainly in English-speaking countries. Many of the modern systems that promote best practice within tax authorities were developed in anglophone countries, especially Australia. International donors, and particularly the UK’s Department for International Development (DFID), have directly and indirectly promoted a lot of reform of national tax authorities. In fact, this has been one of the success stories of British aid.

A package of reforms has been pursued in anglophone Africa. The most profound change is the amalgamation of revenue collection under a single agency, often referred to as a semi-autonomous revenue authority (SARA). Previously, it was common for tax collection to be dispersed among a number of departments within the Ministry of Finance. For example, different people would be in charge of collecting income tax, VAT and excise taxes. Multiple lines of tax collectors existed, usually not co-operating with one another and each trying to strike private deals with taxpayers. This structure – and practice – still occurs in much of francophone Africa.