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Africa Tax Spotlight 2010: tax competition, tax incentives

86, Development Comments Off

Sep 242010

The latest edition of Africa Tax Spotlight, the newsletter of the Tax Justice Network for Africa has just been published.

The theme of this issue is tax competition, with a special focus on the West African region and on tax incentives. The issue comes at a time when sub-Saharan African governments are prioritising efforts to reform and develop their tax systems in order to enhance the full potential of domestic resource mobilisation.

In the lead article Tax Incentives: Tool for Attracting Foreign Direct Investment in Nigeria, Adeniran Samuel Fakila looks at a range of tax incentives in Nigeria in various sectors, combs through the country’s long and troubled history in this area, and asks who benefits from these incentives.

In Taxation, Citizenship and National Development, Bishop Akoglo of ISODEC in Ghana looks at the challenges and limitations of taxation in countries with large informal sectors, narrow and rigid tax structures, undeveloped banking sectors and weak institutions and explores how the politics of taxation tends to take place in non-public arenas, typically small lobby groups pressuring for exemptions, though he sees local government as an exception to this. Overally, if tax is so important for nation-building, he asks, why is it rarely central in economic and policy debates?

ISODEC’s Daniel Chachu follows this with What’s oil got to do with it? Replacing baskets with buckets in Ghana’s Domestic Revenue mobiisation Efforts. Chachu traces some of Ghana’s post-independence tax history and looks at the prospects as Ghana enters the oil age.

This is then followed by Dr. Mohamed Jalloh’s Tax incentives and foreign direct investments: implications for the Sierra Leone Economy, and ontlines some of the major tax losses the country has suffered from tax incentives which tend to happen on a case by case basis without any unified framework.

Christian Aid’s Amadu Sidi Bah follows in the Sierra Leone theme with The paradox of incentive-based taxation and enhancing revenue mobilisation in Africa: the impacts on corporate taxation in Sierra Leone which sees tax competition as the direct result of an unfettered race between poor countries to attract investment, and drills down into different taxes and incentives in the aid-dependent country where tax constitutes just over 11% of GDP, as opposed to 30-50% in most OECD countries.

These articles are complemented by a series of reports on various TJN activities, from one on the French-language campaign Stop Paradis Fiscaux (in French), a report on our August 5-6 Manila meeting, a look at French civil society’s pressure on the French government; a look at our forthcoming film Ca$hback, on the recent policy round table meeting in Johannesburg, anothermeeting on tax revenues for poverty reduction in Cameroon, and an interview with ISODEC’s director Bishop Akoglo.

Enjoy!

The OECD makes a big step forward

86, Country-by-country, Development, OECD, Tax Havens, Tax management Comments Off

Sep 222010

This article is on the Guardian site this morning. It’s written by Mario Pezzini is the director of the OECD development centre in Paris. He says:

This year, many African countries celebrated 50 years of independence. And yet, too many African governments fund development policies primarily by using foreign aid and not by mobilizing their own resources. For some countries, there are not yet alternatives. But for many others, it is possible and urgent to develop a fairer and more efficient taxation system. Unlike aid money, which will likely remain painfully limited, tax revenue can make an enormous difference to achieving development goals. In 2008, the combined fiscal revenue in Africa reached over $400bn – 10 times the total amount of aid money flowing to the continent.

The international community could play a key role. Saying that African countries should rely more on themselves is not the same as saying they should be left to achieve this alone. Development partners could support an international tax dialogue to voice and address Africa’s concerns on issues such as tax evasion, fiscal havens and abuses by multinationals.

Meanwhile, the more efficient a country’s use of collected taxes, the less tax revenue it will need to collect to provide decent infrastructure and functioning public services. Reforms are needed to improve the public sector’s investment capacity and to involve the private sector in partnerships. Monitoring and evaluation of public expenditure should become the norm, and coherence between national and local actions has to be improved.

Long-term, sustainable development will always be contingent on local ownership and domestic resources. These in turn require informed public policies with long-term perspectives. This is the key to African countries’ ability to diversify their economies and take a more central role in the global economy. Aid helps, but it is not enough.

The Tax Justice Network could have written that.

Without the Tax Justice Network that would not have been written.

Now it’s time to get the OECD tax directorate to agree. They have not bought the idea of country-by-country reporting which is one step to addressing this issue as yet. And their secrecy jurisdiction initiative is bogged down in their inappropriate belief Tax Information Exchange Agreements when there are much better forms of information exchange available.

Buit having the development people firmly on side is a big help. And it shows we’re wining the argument.

Black money in Swiss banks: How it hurts the economy

86, Development, Tax justice Comments Off

Sep 172010

There’s an excellent article here from India, showing that some realise that what the Tax Justice Network is arguing is about creating economic justice in their country.

It’s what the campaign is, and has always been about.

Those who argue for tax havens / secrecy jurisdictions argue otherwise.

On some things you can be black and white.

Ireland is a tax haven

86, Ireland, Secrecy jurisdictions, Tax Havens Comments Off

Sep 072010

The Sunday Business Post in Ireland had a story this week saying:

Senior government officials were advised ahead of the last budget that Ireland’s perception abroad was important when formulating international tax policy, given that Ireland has been ‚Äò‚Äòerroneously’’ dubbed a tax haven. A document prepared for the Tax Strategy Group, ahead of the 2011 budget, outlines why Ireland is not a tax haven but said policy must be aware of international views. ‚Äò‚ÄòIn framing policy, we need to take a balanced approach that has due regard to wider international developments," it read. The Tax Strategy Group is a high-powered interdepartmental committee whose brief is to examine and develop proposals for the budget.

The Group said there were two reasons for Ireland to be viewed as a tax haven. The first as the 12.5% tax rate. The second was a:

‚Äò‚Äòrather obscure but nonetheless influential academic paper by Hines and Rice dating back to 1994. Although an academic paper that is now 15 years old, it remains very influential today. Because of its inclusion as a tax haven in this paper, Ireland has been included in later lists of tax havens that use Hines and Rice," read the document.

Whose list? Mine, for the Tax Justice Network is the only one they can be referring to.

And is Ireland a secrecy jurisdiction? Of course it is.

As the Sunday Business Post reports, the Tax Strategy Group said:

However, perception and how Ireland is seen abroad is important and in framing policy we need to take a balanced approach that has due regard to wider international developments.

Absolutely. And what the Tax Justice Network is doing is changing those perceptions by stripping away the pretence others choose to weave around secrecy jurisdictions. And it’s clearly working.

Tax Justice Network USA

86, USA 1 Response »

Aug 252010

Tax Justice Network USA is seeking to appoint a director;

Job Announcement: Executive Director, Tax Justice Network USA

Location: Washington, D.C.

Summary of Role:

This is a leadership position, with the responsibility of building the momentum of the organization. Currently, the Executive Director will be the sole staff member.

Tax Justice Network USA is the national chapter of Tax Justice Network International, presenting solutions for tax policy reform at the national and global levels through research and campaigning‚Äîwhich may include public education, policy discussion, advocacy, media, network building and partnerships.

Founded in 2002, Tax Justice Network International now has full-time experts in more than two dozen countries, plus an internationally recognized network of senior board members and advisors. It is by far the oldest, most experienced, and most highly focused non-profit spearheading the global campaign to clean up tax havens/secrecy jurisdictions.

The Executive Director is hired and supervised by the Tax Justice Network USA Advisory Board, together with the Executive Director of the Fund for Constitutional Government, the fiscal sponsor of Tax Justice Network USA.

Core Responsibilities:

Campaigner/Organizer: Quality policy analysis and advocacy is provided by individual and organizational members of TJN-USA. The Executive Director will take that analysis and advocacy capacity and link it with grassroots organizations to effect successful campaigns to change the actions of the US government, including regulatory agencies, and corporations.

Leadership for the organization: As envisioned by the Advisory Board, the Board of The Fund for Constitutional Government, and Tax Justice Network International, Tax Justice Network USA is a campaigning organization that combines excellent policy analysis with broad and energetic campaigners from the grassroots through to national policy makers.

Strategic direction and implementation: The U.S. national chapter of Tax Justice Network’s success is essential in itself, as well as for the global success of international campaigns on tax justice. TJN-USA is an active and strategic partner within the TJN international network.

Fundraising: It is essential that the Executive Director be a successful fund-raiser, with a strong and positive partnership with the Development Committee of the Board of Advisors. The Executive Director will define the annual operating budget, subject to approval by the Advisory Board, and raise funds to support the budget.

Media and Communications: Translate policy language to campaign language, while developing extensive media (TV, Radio, Print and Web) contacts to disseminate the agenda of TJN-USA.

Staffing: Define staffing needs, subject to approval by the Advisory Board, and hire, train, and supervise personnel.

General operations and administration: Initially, as the sole staff member, handling all day to day administrative tasks and organizing technical support and practical resources.

Qualifications:

Successful experience serving as an Executive Director or senior staff of a non-profit, development, policy, philanthropic, or advocacy-focused organization. The person must have successful fundraising, campaigning, management, and supervisory experience.

The position requires a minimum of five years experience and demonstrated expertise in the following areas:

Experience raising funds for not-for-profit organizations of similar size and scope, from individuals, foundations and members, with annual budgets of at least $250,000.

Experience in designing and leading national campaigns that bring together a wide range of grassroots activists, media, and policy experts to achieve genuine change in the actions and outcomes of government and/or corporations.

Some knowledge of tax issues is essential, but detailed knowledge is not. The candidate must be familiar with and understand the significance of secrecy jurisdictions / tax havens for poverty and policy in the US and internationally.

Strong and dynamic leadership, able to motivate “unlikely partners” to achieve a common goal.

Exceptional verbal and written communications skills.

Experience in fostering a highly dynamic and collaborative work environment, involving staff, volunteers, network members, and campaign activists.

Commitment to the values and vision of the Tax Justice Network.

Compensation: Salary and benefits package are dependent on experience.

Some travel will be required.

This is an “at will” hiring.

Tax Justice Network USA is an Affirmative Action/Equal Opportunity Employer.
Qualified persons are encouraged to apply regardless of their religious affiliation, race, age, sex, sexual orientation or disability.

Application Process: Qualified applicants should send a cover letter and r?©sum?© to: info@fcgonline.org

Closing Date: Applications reviewed on a rolling basis until position filled.

Using Tax Justice Network data for anti-money laundering risk assessment

86, Secrecy jurisdictions Comments Off

Dec 172009

As if to shatter stereotypes I gave an on-line one hour seminar to a group of US anti-money laundering officers and advisers this week, organised by a dynamic senior manager in Deloitte, New York.

Feedback suggest that they enjoyed what I had to say: I enjoyed leading the session. I also massively appreciated the chance to do so without ever leaving my office here in the UK.

The discussion was wide ranging, some of it quite technical (I am still a money laundering officer myself) but the focus was on how the data that TJN has created in its Secrecy Jurisdictions web site (well over 1,000 pages of it) could be used for anti-money laundering risk assessment purposes.

Risk assessment in that sector is in no small part based on available rankings. The OECD rankings play a role for example: so does Transparency International’s Corruption Perceptions Index. What was clear was that because the TJN work was a) rigorous and b) sourced in every case and c) could be aggregated (i.e. a risk score for a structure over a range of jurisdictions could be easily computed) it has considerable potential for use in this sector.

I admit that would probably need the database to be more easily accessible – for which we did not have funding. But it would be great to work with people keen to achieve that. If anyone wants to call, please do.

Tax justice in Ghana

86, Development, Transparency Comments Off

Sep 142009

A new tax haven created by the West African state of Ghana could attract tax dodgers and drug traders seeking to launder money unless safeguards are introduced, warns a report launched today.

The report, Taxation and Development in Ghana, co-funded by Christian Aid Ghana, says the potential detrimental effects of the International Financial Services Centre (IFSC) could be felt across the region. The centre has been set up with the help of Barclays bank.

‚ÄòThe risk of illicit funds finding their way into the offshore financial centre is particularly acute given the extensive cocaine trade in the country and the massive flows from oil that are expected in the near future’, says the report. Large oilfields were recently discovered off Ghana’s coast.

If the Ghanaian government is committed to the IFSC becoming fully operational, the report argues that it should first produce and disseminate credible, well-researched evidence about the potential benefits and risks for Ghana. In addition, officials working in the Central Bank, Registrar General and tax agencies should be extremely well versed in the relevant laws and should work closely together to minimise the risks.

Furthermore, the Government should introduce special methods to monitor inflows of funds from regional oil producing states, potentially in conjunction with the Extractive Industries Transparency Initiative, because such funds are of notoriously questionable origin.

The report goes on to warn that unless Ghana co-operates in the global fight against financial crime, it is at risk of being added to the tax haven blacklist set up recently by the Organisation for Co-Operation and Development.^[i]

Other sections of the report are devoted to Ghana’s sources of tax revenue and the need to increase them in order to reduce the country’s dependence on foreign aid.

The report estimates that Ghana currently loses around 50 per cent of the corporate tax revenues it is due each year (that is, it loses some £109 million /125 million Euros) to tax dodging by multinational companies. A major part of the problem, it says, is that most tax officials lack a thorough understanding of companies’ complex tax avoidance schemes.

Mining companies are highlighted as a particular problem, in that they impose major environmental costs but contribute very little to Ghana’s tax revenues, despite their large profits in recent years. For instance, the report states that between 2002 and 2006, mining firms as a group paid a maximum of 2 per cent of their turnover in corporation tax, and a minimum of 0.5 per cent.

The report blames the low contribution of mining on a combination of tax evasion by some firms and their expatriate employees and on the failure of tax officials to properly enforce existing law, some of which they say is too complex.

Another problem highlighted by the report is the failure of Ghana’s tax collection agencies publicly to disclose (and even, perhaps, to evaluate) the effects of the generous tax incentives the country offers foreign investors.

Asked recently about the haven’s potential for abuse, Barclays Bank said: ‚ÄòBarclays has been operating in Ghana for more than 90 years. During this time, we have earned a reputation for partnering with Ghana’s government to extend access to banking services, build a culture of saving amongst the Ghanaian population and promote the development of the Ghanaian economy.

‚ÄòThe creation of the IFSC is another landmark achievement in developing Ghana’s financial services sector and Barclays is proud to have been able to partner with the Ghanaian government in this initiative. We adhere to the highest and most stringent levels of international regulation, rules and industry guidance for the financial services sector.’

The report is being launched today (Monday 14 September) at the offices of the British Council in Accra, to mark the start of Ghana’s Tax Week, organised by the country’s Chartered Taxation Institute. The study was commissioned by Christian Aid Ghana from Tax Justice Network Africa.

The report is available at: http://www.christianaid.org.uk/images/taxation-and-development-in-ghana.pdf