Tax collectors tipped on capacity development, revenue growth
A boom of businesses and dynamic markets on the continent require tax administrations to continuously develop capacity of their personnel as a way of matching taxpayer needs.
The Head of Training at Kenya Revenue Authority (KRA) Dr. Fred Mugambi said this when he officially opened the fourth edition of Tax and Development course at the Kenya School of Monetary Studies in Nairobi.
The course has attracted participation from a wide spectrum of the civil society, donor community, government officials, the press and revenue administrators from Niger, Zimbabwe, Botswana, South Africa, Rwanda, Malawi, Gabon, Namibia, Tanzania, Nigeria the European Union and the hosts Kenya.
“Human resource is central to operations of the public and private sectors. As our revenue agencies move to adopt technologies that are helping our nations to collect, secure and grow revenue bases, training of staff must be adopted as a continuous process and not just a once-off act.
“This is because with the very same technologies, taxpayer needs are advancing. Therefore, we must always have capacity development programmes that achieve timely skills empowerment for staff to efficiently perform in tax services and of course growing our revenue bases,” Dr. Mugambi said.
The African Tax Administration Forum (ATAF) has organized the course which is being jointly facilitated with KRA. Trainers have been drawn from the DRC, Ghana, South Africa, Britain and Kenya.
ATAF Technical Adviser Dr. Bernd Schlenther, who is also one of the trainers, said the group has undertaken various technical assistance activities resulting into changing of tax laws to boost operations of tax administrations.
He has since advised revenue agencies on the continent to always update the public on what taxes are being used for to avoid resistance when it comes to fulfilling tax obligations.
In his lecture titled ‘Understanding Illicit Financial Flows (IFFs)—Stop the Bleeding Campaign’ one of the trainers, Abdalla Ali Nakyea said it is high time African governments and tax bodies explore collecting due revenues from underground transactions.
He highlighted that what African countries get in aid is so little compared to what is lost through illicit transactions.
He lamented that economic profits of activities performed on the continent are being illicitly transferred out of African countries but the disheartening fact is that re-investments and related expansions by companies are not taking place in Africa.
“Between 2003 to 2012 Sub-Saharan Africa lost US$528.9 billion to western countries in illicit finances. This is very high compared to the US$348.2 billion in aid received by the region from the west. Most of the funds are lost through exports that are mispriced, smuggled out and under-declared.
“The good thing is that the real volumes and owners of such goods are easily recorded by countries receiving such exports. What remains, therefore, is for African governments to just follow through those records, demand back the right amounts of due revenues and not crawl with begging bowls. Crying for donor aid is pathetic and embarrassing because we already have more in due revenues from the western and eastern countries,” he said
He advised African governments not to be lazy but compare their respective export data with trading partner countries where disparities are clearly visible.
“For example the Swiss Ambassador touted the diplomatic relationship with Ghana and gave an example where gold imports have increased to US$2 billion in 2017 and yet records official records from Ghana showed a very low figure for the same period. This is one of the starting points that can lead to thorough review and recovery of revenues,” Nakyea said.
He stressed that reduced tax earnings resulting from hiding taxable funds has a direct effect on the provision of public services such as schools, clinics, sanitation, security, water and social protection.
“When monies are moved out, economies do not benefit from the multiplier effects of the domestic use of such resources, whether for consumption or investment. Such lost opportunities impact negatively on growth and ultimately on job creation in Africa,” said Nakyea.
Illicit Financial Flows are known for easy drainage of hard currency reserves, heightening inflation, undermining legitimate trade, worsening poverty, widening income gaps thereby inhibiting growth and the ability of nations to invest in infrastructure and businesses.
Annually, Africa is currently losing US$50 billion in IFFs and for the past 50 years over US$1 trillion has been lost due to the malpractice.
BY HENRY MCHAZIME