| Tax reform is vital for development |
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“Experts confirm that nothing stands in the way of putting a tax on financial transactions into practice, governments now need to make it happen,” said Hilde Wipfel of the NGO KOO, a member of the CIDSE network. “It could make those who have reaped the greatest benefits of globalization support the world’s poorest who have benefited the least from it.” Meanwhile, a new OECD report shows that many African governments could greatly increase the resources available for public spending by reforming their tax systems to “deepen” their tax base, cutting out arbitrary tax exemptions and bringing more activities under the tax system. Jean-Philippe Stijns, main author of the OECD’s Africa Economic Outlook 2010, explained: “African countries must create a highly qualified, well-paid, and honest tax administration elite to make sure that the state can collect the financial resources it needs to pay for development programmes”. “Uganda and Rwanda, two of the countries with the lowest income in the African continent and which suffered devastating civil wars in the recent past, have been able to put in place a qualified, efficient tax administration consisting of an elite of public servants isolated from political struggles,” he added. Samuel Fakile, a professor of economics at Covenant University in Nigeria, commented: “Tax revenues are relatively low in most countries in Africa. Raising additional tax revenue is further constrained by weak state legitimacy, as taxes have often not translated into improvements in public service delivery.” “Taxation is a core governance function. It has the potential to shape relationship between state and society in significant and distinctive ways. In Europe, tax not only helped create the state, it helped to shape the state,” he added. Read the Report of the Committee of Experts to the Taskforce on International Financial Transactions and Development at: Globalizing Solidarity: The Case for Financial Levies Read CIDSE’s position paper on the subject at: International taxes on financial transactions: Responding to global challenges - towards a fairer sharing of costs Sources:  |
Spurred by the scarcity of financial resources which governments around the world are struggling with, there has recently been a strong drive to find viable new sources of finance to increase development spending. Last week, an international group of experts provided governments with a road-map for the introduction of a global tax on financial transactions as a source of development financing. The International Leading group on Innovative Financing for Development calculates that a tax of 0.005% on international transactions would raise US$ 33 billion a year for development with no significant impact on the real economy.
