Growing inequality and wealth concentration where half of the world’s wealth lies in the hands of just 1% of the population poses a serious threat to the global economy and undermines democracy. Existing flaws in international financial systems have significantly contributed to aggravating global inequality. Inequality in all its dimensions leads to further marginalization of vulnerable groups and creates despondency which undermines social and political stability. Additionally, the inability to effectively tax corporate income due to favorable tax incentives has made governments in Africa target the so called informal sector as a source of additional revenue. As a result many African countries have an imbalanced tax mix between direct and indirect taxes and tend to depend more on indirect taxes which are often regressive. Regressive tax systems usually burden the poor more than the rich. Particularly Value Added Tax and other consumption taxes have become a key source of revenue generation for many countries in Africa. Efforts to introduce reforms that would see the rich pay more taxes through measures such as Capital Gains or wealth Taxes have faced significant opposition partly due to business and elite capture.
The strategic driver under this thematic programme is weak and regressive tax systems characterised by narrow tax bases which increase the burden to low income earners, ultimately aggravating inequality and poverty. Our goal is to achieve equitable, transparent, accountable and inclusive domestic tax systems in Africa.