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Tuesday, 13 July 2010

SG Chambas highlights the need to broaden tax bases in ACP countries

Secretary-General of the African, Caribbean and Pacific (ACP) Group, Dr. Mohamed Ibn Chambas has emphasized the importance of mobilising internal resources to broaden existing tax bases to be efficient to attain economic growth and reduce poverty. Speaking as one of the panelists during the launch of the 2010 African Economic Outlook (AEO) in Brussels this week, under the theme ‘Mobilisation of Public Resources, Tax Governance and Aid in Africa’, Dr Chambas said that increasing tax revenues also means that the taxation systems must be reformed.Dr Chambas wanted the reforms to focus on following aspects: continued enlargement of the tax base by taxation suited to the rural sector, subjecting the informal sector to taxation and streamlining tax breaks and customs benefits. He added also the need for strengthening policies and strategies for the mobilization of resources by enhanced performance by tax and customs departments, better organization of the various financial control systems and fighting corruption, fraud and tax avoidance. The AEO Report also finds that strategies towards more effective, efficient, and fair taxation in Africa typically lie with broadening the existing tax base. Policy options include cracking down on fraud and evasion, removing tax preferences, particularly for large corporations and traders, dealing with abuses of transfer pricing techniques by multinationals and taxing extractive industries more fairly and more transparently. Welcoming the Report, Dr Chambas said that the AEO is a tool for economic development in the continent. He commended the Report and those who helped to produce it, in particular, the African Development Bank and the OECD. ACP is one of the key partners of the project. According to the AEO, the global crisis brought a period of relatively high economic growth in Africa to a sudden end: Africa’s GDP growth was slashed from an average of about 6% in 2006-2008 to 2.5% in 2009. Given the pace of population growth this means that growth of per capita GDP came to a near standstill. Average growth is expected to rebound to 4.5% in 2010 and 5.2% in 2011, although the recession will leave its mark.Dr. Chambas was also thankful to the EU for being part of the launch stating that the ACP Group is please to contribute, by way of its intra-ACP resources, to the financing of the publication.

Source: ACP Secretariat