Finance: International Conference on Taxation, Statebuilding and capacity development in Africa Pretoria, South africa
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I want to begin by expressing my thanks to Minister Trevor Manuel, to the Gauteng, South African Government and the South African Revenue Service for hosting this important event, to the Commissioners of Botswana, Ghana, Nigeria, Rwanda, South Africa and Uganda for co sponsoring the event, and to the support provided by the African Development Bank and governments of Germany, Ireland, Netherlands and United Kingdom.
In April the OECD issued its latest Economic Outlook for Africa. We saw a continent that was at last beginning to fulfill its economic potential. For four consecutive years, Africa has experienced record economic growth. In 2007 the continent registered 5.7 % GDP growth and indications are that growth will only accelerate in 2008.
This trend however hides multiple realities that call for varied policy prescriptions. For oil exporters the objective is economic diversification that will support growth when the oil runs out or receipts from it decline. Governments need to anticipate the decline in revenues with appropriate policies, including improving transparency and combating corruption. For oil importers the increasing price of fuels exacerbated by rising food prices will lead to a worsening of current account deficits. The danger is that the funding of deficits becomes over-reliant on loans which could lead again to the creation of unsustainable debt levels. Pressures on fiscal positions may also become increasingly difficult to cope with.
Tax administrations have a key role to play in helping governments meet these challenges. Robust revenue growth of the tax base and better tax compliance will enable African governments to finance the skills and infrastructure needed for a vibrant economy to generate employment-creating growth and help to eradicate poverty, while maintaining fiscal sustainability
Important as the revenue raising role of tax administration is, there is increasing recognition that tax isn’t just about raising money to finance development. The question of tax and governance involves a broader structural approach recognising that fiscal institutions may have a pivotal role in that they generate sufficient revenues to provide for development,
o create an environment that is favourable to investment and innovation and can encourage economic growth
o reduce aid dependency by replacing aid with revenue and
o impact directly on state-society relations – the state building part of the conference agenda.
Within the OECD the sharing and development of best practices in tax administration has become an increasingly important area. This year’s Forum on Tax Administration, also hosted by South Africa, had almost 150 delegates from 40 Countries. (The first meeting in Seville in 2004 had 98 Delegates from 27 countries). Some of the challenges faced by tax administrations in Africa are the same as those faced by OECD administrations, and in these areas the OECD can assist. There are other areas where the African experience is different and here dialogue between African administrations and other Southern hemisphere economies is essential.
In this context I am very pleased to note that we have over 30 African economies and 11 other countries here.
Tax officials from developing countries increasingly participate in an organised global community of tax professionals, which enables them to bring back and adapt ideas for successful local implementation. .An important outcome of this meeting will be to strengthen these networks in the African context and ensure that experience sharing both South-South and globally is enhanced.
I look forward to interesting discussions on these difficult issues and to the conference facilitating a strengthening of tax networks and improved co-ordination of activities in an African context
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