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African Governments should harness taxation opportunities to improve investment in children

Taxation is the most sustainable and reliable source of domestic revenue to improve African governments’ investment in children- focused sectors such as health and education. It is important to note that the provision of basic services presupposes the existence of adequate financial resources. As we commemorate the International Day of the African Child (DAC), Tax Justice Network-Africa calls for African governments to improve their expenditure on basic public amenities such as education, health, potable water, transport and other infrastructure to meet the expenditure ratios as per their obligations under the United Nations Convention on the Rights of the Child (CRC), the African Charter on the Rights and Welfare of the Child (ACRWC). This is also stipulated in the constitutions of most African countries and in regional commitments such as the Abuja Declaration (where African governments committed to spend 15% of GDP on health) and the Dakar Commitment (in which African governments committed to spend 9% of GDP on education by 2010).  This is envisaged to go a long way in addressing children’s rights to education, health and potable water among others. Children are among the groups of citizens who are most affected by poor basic public amenities. In most African countries, this is shown by incidences of high infant mortality, stunted growth, elevated levels of illiteracy and acute cases of malnutrition. Many governments cite a lack of sufficient resources as the reason for their inability to implement children’s rights.

Studies conducted by TJN-A in partnership with Save the Children in Kenya, Sierra Leone and Zambia reflect that African governments’ expenditure on public amenities such as health and education fall far below the thresholds stipulated by the CRC, ACRWC, the Abuja Declaration and Dakar Commitments and/or the basic human rights provisions of the countries’ constitutions.

Below is a graph showing public spending on education in Kenya, Sierra Leone and Zambia in comparison to their Dakar Commitment of public expenditure on education of 9% of GDP by 2010:

 

chart- doa

The studies also established that the failure to meet public expenditure commitments can be mainly attributed to insufficient revenue to invest in these public amenities owing to missed taxation opportunities. These missed opportunities are a result of issues such as government giveaways in the form of tax incentives as shown in the joint TJN-A and Action Aid study on tax incentives entitled “The West African Giveaway”(in some cases tax incentives offered by African governments exceed government annual expenditure on health and/or education), shrinking tax bases due to base erosion and profit shifting (BEPS) tendencies by corporates (mostly multinationals) as well as lost taxing rights inherent in Double Tax Agreements (DTAs) signed by most African governments. BEPS is facilitated by illicit financial flows (IFFs) and tax havens as revealed by the High Level Panel Report on Illicit Financial Flows from Africa and the Panama Papers . BEPS, DTAs, IFFs and tax havens reduce the ability of African governments to raise domestic tax revenues by weakening the tax system, taking away their taxing rights and ultimately eroding the tax base.

TJN-A believes that taxation is the most sustainable and reliable tool to raise domestic revenue. This has also been acknowledged internationally as shown by the recognition of the same in the Third Financing for Development Outcome Document. TJN-A therefore calls for African governments to strengthen their tax bases to enable them to mobilise sufficient domestic revenue to finance investments in basic public amenities in line with or in excess of their countries’ constitutional, CRC or ACRWC provisions. TJN-A also calls for other stakeholders within and outside Africa to play a key role in stopping IFFs, pushing for international transparency and accountability standards, getting multinational companies to pay their fair share of tax and have an all-inclusive and participatory process to amend the flawed international tax system. If this is accomplished this will go a long way in meeting the Sustainable Development Goals and the Africa Union Agenda 2063.

Investing in children- focused sectors is an important issue because children are the future of any nation and without them the future of African countries is compromised. The child rights issue is important to TJN-A because it dovetails with TJN-A’s vision of “A new Africa where tax justice prevails to contribute to an equitable, inclusive and sustainable development” as well as its 2016-2020 overall strategic goal of championing for “Improved policies and laws that enhance tax revenue mobilisation in Africa by 2020”.

 

This blog was authored by Cephas Makunike, Policy lead in charge of the Tax and Inequality programme at TJN-A.

The International Day of the African Child has been celebrated on June 16 every year since 1991, when it was first initiated by the Organisation of African Unity (OAU). It honours those who participated in the Soweto Uprising in South Africa on 16 June 1976. Every year, governments, NGOs, international organisations and other stakeholders gather to discuss the challenges and opportunities facing the full realization of the rights of children Africa.

 

16/06/2016

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About TJNA

The Tax Justice Network-Africa (TJN-A) is a Pan-African initiative and a member of the Global Alliance for Tax Justice. Launched in January 2007 during the World Social Forum (WSF) held in Nairobi, TJN-A promotes socially- just, accountable and progressive taxation systems in Africa. It advocates for tax policies with pro-poor outcomes and tax systems that curb public resource leakages and enhance domestic resource mobilisation.

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