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ECA calls for inclusive tax system to secure SDGs

by Haruna Gimba

By Asmau Ahmad

The United Nations Economic Commission for Africa (ECA) has called for an inclusive international tax system and an overhaul of the global financial system as part of a global deal to secure the Sustainable Development Goals (SDGs).

It will also enable African countries to focus their resources on sustainable and inclusive development.

The acting Executive Secretary of ECA, Antonio Pedro, made the call on Thursday in a statement by the Communications Section of the ECA.

The ECA chief was speaking at a sub-committee on Tax and Illicit Financial Flows meeting of the Second Specialised Technical Committee on Finance, Monetary Affairs, Economic Planning, and Integration of African Union.

Highlighting the challenges facing African countries in generating domestic resources for economic, social, and environmental investment, Pedro noted that “the fiscal deficit in Africa is estimated at five per cent of GDP in 2022 and expected to remain higher than pre-pandemic levels.”

Pedro stressed the need to raise additional resources as African countries face multifaceted challenges, adding that a double-digit growth rate is needed to rescue the SDGs and accelerate the implementation of Agenda 2063.

“However, the question remains, where does this growth rate come from?” he questioned.

To respond to the imperatives of the SDGs and transform Africa’s economies, Pedro said that multilateral financing “is increasingly becoming inadequate and unfavourable and that international private financing is equally challenging and costly owing to poor credit ratings stemming from structural issues and systematic bias.”

The ECA boss reiterated the UN Secretary-General’s recent call for a global deal that enables developing countries to focus their resources on sustainable and inclusive development and avoid a breakdown of the global order.

Pedro called for “a complete overhaul of the global financial system, the creation of an operational debt relief and restructuring framework, strengthened domestic resource mobilization and an inclusive international tax system.”

He also stressed the need for concerted efforts at the national, regional, and global levels and lauded the set of reforms currently being advocated by the African High-Level Working Group on the reform of global financial architecture.

Pedro explained the importance of “an inclusive international tax system to ensure the taxing rights of African countries and the need to formulate an African Position on the UN Tax Convention.”

This, he said, stems from a resolution adopted by the UN General Assembly in 2022 to begin discussions on the possibility of developing an international tax cooperation framework.

“With this backing, Member States will be able to begin intergovernmental discussions on ambitious reforms to the global governance structure to curb global tax abuse by multinational corporations.

“As a first step, ECA, in collaboration with the African Tax Administration Forum (ATAF), is supporting 10 African countries in estimating tax expenditures using a benchmarking methodology to examine the lost opportunities of tax revenues given as tax incentives and other perverse practices that could have been used for sustainable development,” he said.

Pedro also highlighted the need to address Illicit Financial Flows (IFFs), which continue to siphon critical financial resources away from the continent.

He said while progress had been made to bridge the data gap by developing harmonised methodology for estimating IFFs on the continent, there was need to do more on accelerating implementation.

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