The raising of revenues constitutes a central activity of any modern state. The capacity of the state to mobilize revenues from different sources is a measure of how the state is able to deliver on its core function of stimulating economic growth and infrastructure as well as providing funding for social services and national development. Taxation therefore has traditionally been and yet still remains the most reliable and sustainable source of government revenues today. For this reason, taxation resources lies at the heart of the state’s capacity to maintain just social and economic relations through tax policies that promote redistributive income and growth among all segments of the country’s population.

In recent years, taxation regimes in countries have begun to attract serious attention in the development arena. This stems from concerns that that while developed countries have had effective tax design systems that guarantee resource mobilization and utilization to accelerate socio-economic growth and welfare creation, this is far from becoming the reality in countries especially in sub Saharan Africa. Evidences suggest that main problems faced by many developing countries lies in state incapacity to design good and equitable tax regimes to lack of concerns of how tax policies reinforces inequities that can offset social relations. In many cases, the lack of participatory systems in the design and evaluation of tax policies represents a missed opportunity for the state to promote good tax administration policies that should have enhanced the prospects of efficiency and effectiveness of the revenue generation and redistribution. In recognition of the scale and seriousness of the problem, Christian Aid estimates that figure of tax loss stands at USD 160 billions, three times more than the entire development financing to the third world¹.

In many countries with a huge mineral economy, the tax regimes has been characterized by huge losses of revenue accrued from either the provision of generous tax incentives systems to the resultant capital flight from mining companies and other commercial entities or to a wide spread tax evasion. It is therefore not surprising a number countries in the region are characterized by poor public finances with small tax bases, which increased their vulnerability for over dependence on external aid and debt financing. It is this circumstances that explains low social contract exists between citizens and government, largely in part of failure of citizens to comply with tax payment due to the absence of state revenues and mechanisms to provide demand-driven social and economic services needed by citizens. The is further compounded by the fact that there is a lack of level field and incentives for all business to enjoy tax exemption that enable small business to profit from paying which contribute to the growing domain of the informal economy which accounts not only for a huge loss of vital untapped resources but also contribute to the growth of informal economy largely dominated by small and medium business.

Policy Round Table
The Africa Forum and Network on Debt and Development (AFRODAD) in collaboration with the Institute for Democracy in South Africa(IDASA) and the Tax Justice Network-Africa(TJN-A) are organizing a two day policy round table to be held in Johannesburg – South Africa on the 14^th and 15^th of September.

The meeting will bring together tax policy experts from the southern Africa region to deliberate on issues of taxation policy as they relate to the efforts of the region to raise domestic resources to finance their development. Invited participants will include members of Parliament, Researchers, Tax practitioners from the private sector and representatives from relevant government ministries and regional institutions.'

The meeting takes place at a backdrop of the increasing reliance of governments from the southern Africa Region on tax as a source to finance government expenditure.

The Policy round table will provide an opportunity for the various stakeholders to exchange idea and share experience on best practice and also discuss challenges facing the Region.

Objectives
The purpose of this policy Round Table is to:

• Deepen the understanding and capacity of policy makers from the South Africa Region on the importance of domestic resource mobilization and specifically tax to the region’s economic development.
• Create a platform for participants to share experience, expertise and best practice on their efforts to mobilize tax revenues.
• Provide an opportunity identify areas of common concern including exploring of common opportunities and challenges.

Expected Outcomes
The round table will seek to achieve following outcomes:

• Shared analysis and understanding of the policy issues raised and or implicated in the different financial regimes including reform agenda at regional level.
• Shared understanding among participants on common agenda and positions regarding domestic resource mobilization in the South African Region.
• Agreement on common strategy for engagement in the tax policy formulation and implementation in the region.

Themes:
The Policy Round Table will focus on the following themes

1. Taxation and MDGs:
   Most recent estimates on MDGs indicate that many countries in Africa will not be able to meet the set target. The period for their achievement in 2015 sets in one of the major challenges that has been identified as a barrier is the lack of financial resources. The Panel of Taxation and MDGs will explore the question how tax can been used as an instrument to generate the necessary resources and bridge the finance gap.


2. Taxation of extractives.
   Many countries in the South African region depend on revenues from extractive sector to finance government programmes. Taxation of extractives in the region has been faced with a number of Challenges including low level of tax rate, policy inconsistence, and the usage of tax incentives which has eroded the countries tax base. Additionally many of the mining contracts and agreements are shrouded with secrecy which hampers a transparent public debates on the their benefits to the country. The panel on taxation of extractives will discuss these challenges and best practice in southern Africa countries while reflecting on proposals of increasing transparency in the operations of the extractive sector.


3. Taxing MNC: A question of Corporate Social Responsibility?
   Activities of multinational companies in Africa are often discussed from the prism of job creation, technology transfer and creation of backward and forward linkages to domestic economy. Discussions on Tax practices of this companies or the question how much they (can) contribute to state revenue is yet to receive equal attention. Many MNCs are involved in aggressive tax avoidance using creating accounting methods such as transfer mispricing for the sole purpose of reducing their tax obligations to the countries in Africa from where they operate. Although many of these companies profess to practice corporate social responsibility many fail to see the connection between their tax practice and CSR. The panel on MNCs seeks to establish this linkage and how it can contribute to address the tax avoidance.


4. Influencing Tax Policy: Role of parliament.
   Although parliament is charged with the responsibility of developing laws that governs countries experience from many African countries show that the tax policy debate including tax policy formulations has been largely left to experts at finance ministries and also to powerful interest groups who manage to push their agenda. The role Members of parliament have been in many cases reduced to accepting or rejecting specific proposals from the government without actively being involved in the formulation states of some of these policy recommendations. The Panel will provide an opportunity for participant to propose ways of strengthening the role of parliament in the tax policy space.


5. Transparency in opaque finance world: Options under discussions.
   It has been argued in some academic circles that the global financial crisis whose medium term impact on Africa is yet to be discerned who brought about partly by the lack or low level of transparency in the global financial architecture. Indeed prudent economic decisions are dependent on the availability and accessibility of necessary information. Decisions Investments and any other economic decisions would be more sub-optimal the less information is made available. That is why important to undertake measures that would contribute to increasing transparency.


6. Resource outflow through capital flight: Role of intermediaries.
   Recent studies have shown that the outflow of resources from developing countries including Africa is estimated to range up to 160bill annually. Corporate tax evasion and avoidance has been identified as the major cause of this problem which poses a immense risk to economic development of poor countries threatening to undermine poverty eradication efforts being undertaken those countries. Analysis on impact of Capital flight has however focused heavily on those individuals and companies that practices tax avoidance and evasion while ignoring the central role that intermediaries including banks, lawyers and accounting firms play in the process. This session will seek bring into focus of policy makers the need to examine more closely the role that these intermediaries play in economic development.


7. Widening the tax base: Potential vs Risks:
   The narrow tax base of many African countries has been identified as of the major reason why Tax contribution to GDP is relatively low as compared to other regions. Many countries in Africa have embarked on efforts to broadening the tax base by widening the payers net. These efforts should be lauded and supported. However from an economic justice perspective it’s important to interrogate these policies to ensure that the broadening of tax bracket does not lead to increasing the burden of those that are economically disadvantaged.


8. Capacity to collect: Challenges facing Revenue Authorities in Africa:
   Fiscal reforms of the late eighties and early nineties saw the creation of semi- autonomous revenue authorities charged with the responsibilities of collecting tax for the government. By making Revenue authorities independent from ministry of finance, providing salaries that were higher than other government civil service governments hoped to increase the capacity to collect by motivating staff or attracting and retaining more qualified staff. While some of these actions have been successful measures by the increase in tax collection in many countries, many Revenue authorities face a number of challenges including high level of corruption, which has contributed to low tax moral and poor compliance.


9. Tax Reforms in Africa: Priorities for southern Africa:
   Fiscal regimes including the tax of tax systems has been on the agenda on economic reforms in Africa as part of countries to increase their revenue base and reduce their dependence of external resources. While some countries in the region have attained some measure of success in enhancing their revenue collections the performance of others has been meager and continues to rely heavily on external assistance to finance their development. The sessions will seek to encourage a broad debate on the fiscal performance of the countries in the south Africa region examining the challenges they face explore the opportunities for successful domestic resource mobilization.

1. Death and Taxes; The true toll of tax dodging. Christian Aid Report May 2008