2024-01-25 08:59:12
Taxation is one of the most important instruments a government has to achieve economic, political and social results; it plays a vital role in a country, particularly in the implementation of development objectives set by decision-makers, according to the World Bank. Unfortunately, in Africa, many people (especially the rich) and organizations – despite being aware of the vital role of taxes on the economy – have implemented “clever” strategies to avoid paying taxes.
Issa DA SILVA SIKITI
A recent UNCTAD report indicates that Africa loses $88.6 billion each year to illicit financial flows (IFFs), which represents approximately 3.7% of the continent’s GDP. This constitutes half of the $200 billion financing gap needed to achieve the Sustainable Development Goals (SDGs) by 2030 in Africa.
“In most countries, tax evasion is commonplace and a complex problem for tax authorities. This is a typical problem, especially in countries with weak and inadequate tax collection systems,” highlighted Kopeng Obed Richmond and Albert Msimang Mncwango, two researchers from the University of Cape Town, in a study published in 2022.
They added that tax evasion could be the reason why many African countries are overburdened with external debts because their tax collection is inadequate.
“It is necessary for African countries to implement targeted policies to maximize revenue mobilization and prevent tax revenue losses,” insisted two World Bank experts, Dief Reagen Nochi and Fahaoludele Folarin.
Another expert, Abbi M. Kedir, reinforced the point, emphasizing that capital flight and tax evasion are significant development problems that require urgent attention from governments if they aspire to increase public revenue and reduce poverty. vulnerability to shocks.
Poverty reduction
“Broadening the tax base increases government revenue and is essential to reducing poverty in African countries. With the volatility of official development assistance, foreign direct investment, foreign loans and remittances, it is clear that the mobilization of domestic resources through taxes is a vital source of revenue for African governments. -he explained.
Kopeng Obed Richmond and Albert Msimang Mncwango, already cited above, make a solemn appeal to the governments of developing countries to collaborate with the tax collection authority to ensure that those who commit the crime of tax evasion are severely punished, convicted and forced to pay fines in order to set an example for others who dare to follow suit. “They must also use tax revenue efficiently and reduce waste, so that more individuals can be encouraged to pay their taxes.”
QA January 25, 2024
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