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TJN-Africa Director: Yes, Taxation Can Be a Good Thing for Developing Countries

February 26, 2013

By EJ Fagan

EJ Fagan was New Media Coordinator for the FTC from 2011-2013. He is now Deputy Communications Director for Global Financial Integrity. You can follow him on Twitter @ejfagan.

nullAlvin Mosiama, director of Tax Justice Network Africa, and a Task Force regional representative, has as much experience as anyone in campaigning on taxes and transparency for developing countries. In a great op-ed for Devex that everyone should read, he outlines how corporations aren’t just shifting profits to tax havens, but simultaneously shifting the burden of funding the government to those that can least afford it.

Mosiama writes,

Our government leaders, like so many around the globe, appear to have little trouble cutting spending on public projects, but struggle to push through revenue expansion policies – especially if it means raising taxes on big businesses (which is ironic as big business has profited so successfully from government infrastructure). Instead, tax incentives meant to attract foreign investment and keep large corporations at home almost invariably lead to revenue loss  as was the case in my country for many years. If we are not able to tax those who turn a profit by using our natural resources, how will we ever manage to forgo foreign aid?

As if that weren’t bad enough, Kenya also suffers from the “offshore” plague, where our wealthiest citizens  as well as a growing number of foreign multi-national corporations  move their money to low-tax jurisdictions, thereby paying little to no tax in either the place of production or consumption. This money rarely returns to Kenya, primarily because this is not where the people who run the companies live.

When the rich are able to avoid paying their fair share of taxes, government must rely on the rest of its citizens to fill its coffers. In Africa, we see a move towards gathering value-added tax, which results in price hikes on basic necessities the poor can barely afford, such as food, health care and education (an example of the poor being taxed even if it is not via income tax, akin to those 47 percent of Americans Mitt Romney famously referred to).

Read the whole op-ed here.

 

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Disclaimer: Unless specifically stated to be the views of the Financial Transparency Coalition, the opinions expressed on this blog are solely the opinions of the individual blogger and are not necessarily those of the Financial Transparency Coalition.

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