The Acting Executive Secretary of African Tax Administration Forum (ATAF), Mr Logan Wort,  has made a case for improved revenue generation through effective tax collection. He made the call last Wednesday at the opening of the meeting on “Multilateral Agreement on Exchange of Information on Boosting Tax Revenue”, in Pretoria.

“Although Africa is experiencing increased growth in trade and investment, the continent should boost its tax collection to ensure sustainable revenue base for development.

“But most importantly, it is probably because of the increased realisation that Africa is gearing itself for growth that it is sorting out not only the relationship between citizens and the state but also the economic environment that makes investment viable,’’Wort noted.

Reports that ATAF was formed in 2008, with the objectives of promoting  economic development, good governance and accountability as well as combating tax evasion and avoidance, among member countries.

Wort drew attention to the example of Rwanda in year 2000, with a tax to GDP ratio as low as seven per cent.

“This has now increased to about 14 per cent to 16 per cent due to the work done by the Rwandan revenue authority.

“Collected taxes on the continent increased from an average of 17.9 per cent of GDP in year 2000 to the current average of 20.3 per cent,’’ Wort said.

He said that there was growth on the continent adding that the challenge was how to stem the tide of tax and capital outflow from African economies.

According to a report, illicit capital flight from developing countries is anything between 500 billion dollars and 800 billion dollars per annum, he noted.

“In some cases, revenue lost exceeded the level of aid received by developing countries,’’ Wort added.

Wort said the exchange of information was crucial in the development of African economies because it allowed the continent’s revenue authorities to commence work on gathering information that may be relevant to the legal processes

for taxpayers in different countries.

“Clearly we must aim to at least increase our revenue by another four per cent of GDP in the next five years to create some form of sustainable revenue collection and growth in domestic revenue.

“Our challenge is to secure more sustainable revenue sources and in particular, to broaden the tax base while optimising administration and our service to tax payers on the continent.

He said that a large number of individuals were not taxed on the continent.

“In the countries where citizens are taxed, you find the strengthening of the democratic process, you find citizens holding government a lot more accountable and “they ask questions, about the quality of spending and that is important,” he stressed.

Wort said an increase in the mix between Vat, indirect tax, company tax and individual direct tax was necessary in order to have a sustainable stream of revenue in African countries.