International Training in Tax Administration

AFRICAN civil societies have been warned not to leave the issue of tax administration in the hands of the governments alone; instead they should form parallel institutions to monitor the same.

This call was made on Monday last week at the Kunduchi Beach Hotel during an International Training in Tax Administration.

The training to representatives of civil societies drew attendants being trainers and other participants from East Africa, West Africa and Southern Africa.

In the workshop that was convened by the Policy Forum NGO. It was learnt that tax collection is turned into a political weapon by many African countries Tanzania inclusive.

It was learnt that the political oligarchy tend to muzzle through tax collection the commercial people who are contrally to their tastes and they tend to give offers in various forms like havens, holidays, and exemptions those in their favour.

But this nasty game which has long term calculated moves to evade tax involves the multinational companies no wonder there are changes of names and ownership in some big companies in order to evade capital gain tax.

For instance in Tanzania there have been such changes with Serena Hotel which previously had various names from Sheraton, to Royal Palm, Moven Pick and now Serena.

In mobile phone companies there have been changes of names with Celtel, Zain and now Airtel just like it was with Mobitel, Buzz and now Tigo.

It was with such changes that the civil society and investigative journalists were counseled to investigate the motives behind such changes.

During his opening remarks the Policy Forum (PF) Coordinator Semkae Kilonzo said that tax administration has caused a lot of problems in African countries.

This is due to evasions which are manipulated through various corrupt means. He delineated that a lot of revenues are left untapped and therefore denying people adequate services.

“If taxes are not collected properly it means some of the Government’s revenues are left outside and hence denying the people income through services which are essential,” he commented.

He added that it was the duty of the civil society to ensure that reports are published and there is transparency on who should to pay what.

“The tax regime is poor in Tanzania and many other African countries because the whole issue has been left to the civil servants hence corruption and capital fight out of Africa have become common phenomenon,” he added.

Jack Ranguma a tax expert from Kenya said that he has conducted a lot of researches just to find that proper collection of taxes can be effective if various community groups are involved in the monitoring programmes.

Ranguma who is former Commissioner of Kenya Revenue Authority is currently working as a consultant with the Kenyan Tax Research Institute.

He mentioned such groups as parliamentary groups, villagers, and distribution functionaries with the aim of ensuring that there is justice in tax administration and that there is enough capacity building in order to create awareness. 

“If people are reluctant to pay tax then it means that they do not see the direct benefit of paying taxes to their government and this is a reflection that either tax rates are too high, or the tax authorities are weak,” he commented.

Ranguma said that the main problem with developing countries like Tanzania is the fact that they give priority to the expenditure side than to the income generation one.

He challenged that this trend eventually deprives some important projects like hospitals, schools, infrastructures and hence leading to the vicious cycle of poverty.

He further explained that once there is proper collection of taxes there will be stable economy of a country. He warned that without this stability the rich tend to manipulate the economy much to their advantage.

“I am convinced that Africa, and other poor countries need to discuss with the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD) more seriously, and constructively for both sides,” he commented.

The tax expert also argued that the failure to monitor social security funds and pensions which are other forms of tax, denies the weaker equity while at the same time these are more beneficial to the high ranking officials.

“Even social security fund is a tax but in a different name, that is why there are a lot of political involvements in these funds. These are meant for re-investment while other employees pay for the retirees,” he added.

Vituz Azeem who presented a paper on the link between tax justice and development said that tax is meant to support development, and if there is poor collection of the same this will be reflected in the national budget.

He warned that many African countries fall prey of corrupt officials in the customs and excises to the extent that big amounts are pocketed to their personal accounts than to the governments.

“Tax administration needs a lot of ethics, if you are working with the tax authority you need to declare your property, also these workers need to report their properties periodically,” he cautioned.

On the issue of tax leakages was Savior Mwambwa who presented a paper on the role of multinationals in tax exemptions, competition, and capital flight.

He said that exemptions are always issued in the pretext of attracting more foreign direct investments, reducing poverty and creation of jobs as well as to allow big growth of the economy.

But in many cases these exemptions are issued through ill motives. However he warned that a good number of such exemptions in various names be it haven, holidays etc, are doing harm to Africa economies than good.

“In many cases tax exemptions is just a creation of a room for corruption, there is a need to create independent body for scrutiny and independent prosecutors who can handle the matters in the court,” he counseled.

Dereje Alemayehu presented a paper on how to mobilize domestic resources in order to avoid dependency. He counseled that citizens must be induced to like payment of tax because in many cases a good number of people do not like payment of such.

“If citizens realize that there is a value for their money they will just be attracted to pay without any kind of harassments or intimidations,” he commented.

Alemayehu mentioned that there are four measures to make people tax willingly; to make state income transparent, to make equity in the provision of services, and minimize the externalization of costs.

Another method is to give voice to the citizenry in regard to public expenditures, on how incomes are generated and spent.

On his side Michael Otieno from the Kenya’s National Taxpayers Association (NTA) said that there is a need for the civil society to institutionalize mechanisms of verifying how tax is collected and spent in a country.

He counseled that through civil society advocacy people must understand that paying tax is amoral obligation and duty which has benefit to their lives.

By Elias Mhegera

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