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Africa urged to build fair taxation systems to curb wealth inequality

HARARE, (Xinhua) -- Unprecedented economic growth in many African countries was going hand in hand with soaring inequality, which national tax systems were failing to address, a latest report reveals.

African governments have been thus urged to build fair taxation systems that address growing income inequality and poverty.

The report “Africa Rising?- Inequalities and the Essential Role of Fair Taxation” was launched at the African Forum and Network on Debt and Development held in Harare on Wednesday.

The report, penned by two NGOs—Tax Justice Network Africa (TJNA-A) and Christian Aid, says that tax is one of the most potent tools at government’s disposal to address inequality, but tax systems in many African countries do not currently fulfill that function.

Instead, the current taxation systems disadvantage the poor. Tax dodging and illicit financial flows facilitated by off-shore secrecy have undermined the distributive role of taxation, the report says. “There was evidence that in many cases growth was taking place at the expense of the poor, who are becoming increasingly impoverished.”

TJN-A spokesperson Alvin Mosioma said the findings reflect the inability of governments to tax the proceeds of growth either because much is given in corporate tax breaks or has escaped offshore into tax havens.

He said inequality had been worsened by the growth model in many countries which has largely seen a concentration of income.

The report builds on an earlier study conducted by AFRODAD, which urged the Zimbabwean government to balance between the need to raise revenue and alleviate the plight of the poor.

AFRODAD executive director, Collins Magalasi, urged African governments to embrace global cooperation in nipping tax dodging and its vices of transfer-pricing and trade mis-invoicing in the bud.

“African governments also need to prioritize the building of fair taxation systems as one surest way of enhancing Africa’s domestic resource mobilization efforts towards financing for development that will ensure and end to inequality and the scourge of poverty,” Magalasi said.

The report investigates income inequality in eight sub-Saharan countries of Ghana, Kenya, Malawi, Nigeria, Sierra Leone, South Africa, Zambia and Zimbabwe.

It also examines the ability of the tax system in each country to redistribute wealth compared to international taxation systems.

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