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 recently
in Dar es Salaam 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.
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