JOHANNESBURG — Citizens are more likely to pay taxes in countries where government funds can be accounted for, panelists said during a media training event hosted by the African Tax Administration Forum in Johannesburg, South Africa. When citizens can see that their tax payments haven’t been spent on building roads and schools, but instead have been pocketed by politicians and their associates, they are more likely to dodge taxes.

Calls for African countries to increase domestic funds to fuel their own development are growing as the future of international development aid remains uncertain. Africa is estimated to lose at least $50 billion through illicit financial outflows every year, according to the report of the High-Level Panel on Illicit Financial Flows from Africa established by the United Nations Economic Commission for Africa. This can include tax avoidance, tax evasion, and corruption, among other activities.

But many African nations have weak tax laws and collection systems which prevent them from roping in tax revenue. There is also often skepticism from citizens who wonder whether governments are putting the funds to good use. 

“It is that social contract where citizens pay in return for the rendering of social services, like infrastructure. The quality of that spending has a lot to do with whether citizens are tax compliant or not,” said Logan Wort, executive secretary of ATAF. “Tax works in countries where it is either fair, or at least perceived to be fair.”

JOHANNESBURG — Citizens are more likely to pay taxes in countries where government funds can be accounted for, panelists said during a media training event hosted by the African Tax Administration Forum in Johannesburg, South Africa. When citizens can see that their tax payments haven’t been spent on building roads and schools, but instead have been pocketed by politicians and their associates, they are more likely to dodge taxes.

Calls for African countries to increase domestic funds to fuel their own development are growing as the future of international development aid remains uncertain. Africa is estimated to lose at least $50 billion through illicit financial outflows every year, according to the report of the High-Level Panel on Illicit Financial Flows from Africa established by the United Nations Economic Commission for Africa. This can include tax avoidance, tax evasion, and corruption, among other activities.

But many African nations have weak tax laws and collection systems which prevent them from roping in tax revenue. There is also often skepticism from citizens who wonder whether governments are putting the funds to good use. 

“It is that social contract where citizens pay in return for the rendering of social services, like infrastructure. The quality of that spending has a lot to do with whether citizens are tax compliant or not,” said Logan Wort, executive secretary of ATAF. “Tax works in countries where it is either fair, or at least perceived to be fair.”

Read more...