When Tax Administrators Met to Chart Pathways for Mobilizing Resources for Sustainable Development
Dingani Banda (Zambia) The taxman has never been anybody’s friend. In several parts of the African continent, when information leaked that tax collectors were visiting, several community members ran away from their homesteads and stayed put on their farms as a creative tax evasion strategy. Although tax evasion always has been classified as a criminal offence, perhaps an interrogation of the context in which it was a widely pectized recourse is necessary.
For millions of taxable adults who were condemned to subsistence farming whose value was “next to nothing” (no attribution here, please!), setting cash aside every year to pay income tax was not easy. Some governments are known to have accepted farm produce in lieu of cash – that’s creative thinking and a much more human-faced option that crude criminalization that drove people out of villages.
Evidence of the emergence of new thinking on the part of tax administrators was provided at the forum under review. The “Outcome Statement” that emanated from the Forum addressed the pertinent issues, challenges, achievements and critical imperatives for moving sustainable tax administration forward in the Commonwealth and Africa.
With 498 registered delegates from 53 countries, 39 of which were represented by their Heads of Tax Administrations, the 7th ATAF General Assembly held in Lagos, Nigeria’s commercial capital from the 31 October – 4 November 2022, must rank as one of the biggest events in the financial services sector in Nigeria in recent time.
But the event held at the Marriott Hotel wasn’t a jamboree -- if the term connotes the popular notions of “a party, celebration, or other gathering where there is a large number of people and a lot of excitement, fun, and enjoyment.” At any rate, Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), which partnered Nigeria’s Federal Inland Revenue Services (FIRS) for its organization, is not known for supporting frivolities. Neither would the large concert of organizations that were represented at the forum, including: the African Union Commission, United Nations, World Bank Group, Organization for Economic Cooperation and Development, Intergovernmental Forum on Mining, International Budget Partnership, United Nation Programme on HIV/AIDS, International Bureau of Fiscal Documentation; regional tax organisations such as the Commonwealth Association
of Tax Administrators, Inter-american Centre of Tax Administrations, Exchange and Research Centre for Leaders of Tax Administrations (CREDAF), West African Tax Administration Forum, Network of Tax Organizations (WATAF); development partners including Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), Foreign, Commonwealth and Development Office (FCDO), Ford Foundation, Norwegian Agency for Development Cooperation (NORAD), African Development Bank (AFDB), Addis Tax Initiative (ATI); and members from the Academia, Civil Society organisations, and businesses.
“Rethinking Revenue Strategies: The Human Face of Taxation” was the theme of the Forum, whose opening ceremony was presided over by the Governor of Lagos State represented by Chairman of the Lagos Internal Revenue Service, Ayodele Subair who delivered the official opening address; Prince Clem Agba, Minister of State for Budget and National Planning of the Federal Republic of Nigeria who gave the key note address; the Chairman of the ATAF Council and Commissioner General of Office Togolais des Recettes, Dr Phillipe Tchodie; the Executive Secretary of ATAF, Logan Wort; Muhammad Nami, the Executive Chairman of FIRS; and Winnie Byanyima, Executive Director of UNAIDS, and Under-secretary General of the UN who was the lead speaker.
The Chairman of the Federal Inland Revenue Service (FIRS) Muhammad Nami urged African gov
ernments to plug leakages in revenue by stressing the need to stop tax waivers and incentives given to high worth individuals and multinationals. He commended the chairman and the council members of ATAF, for choosing Nigeria for this 7th general assembly. “As we know,” he noted, “the ATAF general assembly brings opportunity for clear review and knowledge sharing for emerging issues in tax administration in Africa. More importantly, the government should reconsider how projects are reported in public space and the expected impact it will have on driving a more compliant attitude towards tax remission. Such reports should be communicated to convey the idea that taxpayer’s money is used for public project as against personalizing it.”
Over the three days of the forum, experts in taxation from different parts of the world presented papers on sundry issues, around which robust discussions were held by a broad spectrum of stakeholders, at the end of which participants reached consensus.
Resolutions 7, 8 and 9 of the statement need to be flagged off, in so far as they poignantly address the need for a people-centred perspective on the issues at stake:
• In discussing tax and development in Africa, and the need to improve conditions for domestic resource mobilization, the assembly recognized that the social contract between the government and the public must be evident through improved public services to reinforce accountability and transparency, and in the
process, build public trust. The assembly also implored countries to prioritise the effective use of resources in a manner where the public can feel the positive impact of the sustainable development projects funded by tax revenues, underscoring that this will sustain confidence and belief in the social contract, and improve tax compliance with the multiplier effect of making revenue available for development financing.
• The participants further noted that tax morale in low-income countries is to a great extent reciprocated by what the state provides to citizens. Citizens need to perceive that state provided goods are worth their while, relative to private providers, in order to contribute to the tax system. Governments need to provide public goods fairly and efficiently and these goods must be perceived as being at least of comparable quality to equivalent private services. So, to be able to mend fractured social contract delegates suggested two key roles to be undertaken by states, namely, to create more room for citizen participation and secondly to deliberately institutionalize initiatives to encourage restoration of the social contract.
• Delegates noted further that taxpayer’s willingness to pay tax is dependent on several factors including the perception that the government is legitimate and that it treats citizens fairly, especially the perception by taxpayers that all liable taxpayers pay their taxes. It was also agreed that Tax morale is also higher in situations where taxpayers
do not pay bribes for services and trust the tax administration. Critical towards enhanced social contract is the role of tax administration as primary interlocutors. Therefore, in relation to tax collection, it was noted that citizens’ willingness to pay tax is not only about how much services they receive from government but how they are treated by tax administration officials.
No less important is resolution 14 in which the assembly recognized that improved human capital development and management is critical to any success in DRM. It was agreed that tax administrations put more emphasis on the improvement of integrity and ethics to mitigate corruption. It was agreed that the critical factors the tax administration should focus on, are good human capital management, internal control mechanisms, strengthened technology to support the tax system, carrying out annual taxpayers’ perception surveys, and government accountability.
The assembly charged African countries to re-think how they can benefit financially from their mineral resources. It was emphasized that the Future of Resource Taxation is a dedicated dialogue for governments, civil society, and industry to exchange ideas on how the current system of mining taxation can be improved, as well as alternative options available to resource-rich countries to maximize the returns from their mineral wealth. The assembly noted that the Handbook on the Future of Resource Taxation provides solutions to be considered by mineral producing countries to receive a fair share of the financial benefits from mining to guarantee a reliable supply of critical minerals.
It was not all paper presentations. The following, among others, were achieved:
• The General Assembly empaneled technical experts the work on the ATAF Secretariat relating to such areas as digitization, cross-border transactions for VAT, the development of the ATAF Qualified Minimum Domestic Top up tax and exchange of information for crypto assets. The Heads of Research in RAS also convened to review the preliminary data for the 2022 Publication of the African Tax Outlook.
• Organizers of the forum also relished the ATAF Secretariat’s engagement with Donors and Development Partners on the status and impact of the work on the continent and plans for the future.
• Importantly, the Addis Tax Initiative held a collaborative meeting during the Assembly to discuss gender equality in taxation. The Network of Tax Organisations (NTO) also held its General Assembly meeting on the margins with Logan Wort, Executive Secretary, ATAF emerging as the NTO Council Chairperson.
• ATAF welcomed South Sudan as its 41st member with the signing of the instrument of ratification by Dr. Patrick Mugoya, Commissioner General of the National Revenue Authority of Sudan.
• Presentation of the ATAF Council report 2020-2022, which highlighted its growth to USD 3 billion todate, and to 1.3 billion in collections in just 7 countries.
• Consideration and approval of the amended ATAF Agreement which includes key expansion areas as ATAF aims to extend its services to all regions on the continent.
• Election of a new Council as follows:
Vice-chairperson -- Edward Kieswetter (South Africa)
Members of Council
1. Jeanette Chanda Makgolo (Botswana)
2. Jean Claude Manirakiza (Burund)
3. Muhammad Nami (Nigeria)
4. Younes Idrissi Kaitouni (Morocco)
5. Pascal Bizimana Ruganintwali (Rwanda)
6. Yankuba Darbo
(The Gambia)
7. John Musinguzi
(Uganda)