‘Taxation shouldn’t frustrate production’
AFRICA needs to nurture its budding entrepreneurs and ensure that taxation levels do not frustrate new innovations and domestic production, which form the base of job creation and solid economic growth, Ugandan President Yoweri Museveni said yesterday.
Officially opening the 4th International Conference on Tax in Africa here, he said due diligence was needed when levying tax as he challenged tax administrators and policy makers to constantly evaluate the impact of certain tax decisions on national production.
“We need to carefully determine what to tax and how. Let us stop taxing production. If we want our economies to grow as Africa, we should remove taxation on production,” said President Museveni.
He noted that the productive stage of an economy was critical as it determines the ability of citizens to generate income, which affects consumptive spending and aggregate demand.
“Let the people earn some money and have it in their pockets. When they go to the bar, they’ll pay tax. When you tax them at production stage you discourage growth but when they go to the bar it is voluntary and they’ll share their money with government through tax,” he said.
“This taxation of production is a big mistake, it’s better to tax more on consumption and this is the gospel I want to preach to the rest of Africa.”
The conference is running under the theme: “Innovation — Digitalisation and Harnessing Technology to Improve Tax Systems” and is being attended by policy makers, academia and regional revenue authority heads including Zimra commissioner general Ms Faith Mazani and her team.
President Museveni stressed the need for the continent to embrace digitalisation to improve tax administration efficiency and devise measures to improve compliance as well as weed out corruption.
He said the continent has adequate resources at its disposal and that these, aided by prudent revenue measures, can sustain regional economies without the need for external aid.
He called on technocrats to play their role in assisting governments in drafting sound policies and negotiating deals that best serve Africa’s interests.
President Museveni also reiterated the need for African economies to scale up value addition to realise high value earnings from global trade.
Chairman of the African Tax Administrators Forum (ATAF) Council, Mr Tunde Fowler, concurred with President Museveni on the need to protect the productive sector from excessive tax burden saying doing so not only threatens jobs but scares away potential investors.
ATAF executive secretary Mr Logan Wort said the President’s views must be understood in the context of assisting growth of budding businesses and subsistence producers.
He said small businesses have limited capacity when compared to established industries that have huge capacity but have often been implicated in tax evasion despite making huge profits so as to maximise profits.