News

    G20 Reforms Could Help Boost Revenue Collection in Developing World

    Multimedia

    Audio

    In poor nations, collecting taxes can be tough in the best of times. 

    Economists say in African, and other, developing countries up to $800 billion is lost each year to tax evasion, money that could go toward development, but instead makes Africa borrow money from the rest of the world.

    Tightening loopholes

    Analysts say some multinational companies avoid paying high taxes by using what financial experts call transfer pricing - improperly declaring high income and expenses in the low-tax countries they operate in, while underdeclaring their levels of income and expenses in high-tax countries.

    Henri-Bernard Solignac-Lecomte, a senior economist at the Organization for Economic Cooperation and Development (OECD), says regulation of both transfer pricing and tax havens is important.

    "African governments often do not have the power to negotiate with multinationals whose turnover is sometimes a multiple of their own [gross national product] – terms and conditions that would make those companies fair contributors to the economies in which they are operating," he says. "So far, these are issues mainly discussed by representatives of richer countries who all want to make sure they get their fair share of taxation from multinationals [on their territory]. But Africans have been absent in this debate and need to be brought in. "

    The global financial crisis has made things even more difficult. Slumping economies mean fewer goods and services for governments to tax.

    Room for improvement

    At this week's meeting of the G20 in Pittsburgh leaders may discuss ways to enhance revenues, and improve budgets for improving social programs.

    The group has promised to crack down on tax havens. The Washington Post newspaper, citing sources close to the G20, says the group is considering imposing sanctions on Uruguay and Panama if they continue to shield tax dodgers.

    Some economists have suggested the group consider a tax on international currency transactions to help developing nations build social safety nets. Solignac-Lecomte says, however, that there’s no consensus on the issue: Europeans often favor international taxes, while the U.S. opposes them.

    In the long run, he says the G8 has given a clear mandate to the OECD to help African countries find solutions to tax collection issues.  

    He says the Paris-based organization is helping African countries identify alternatives, including taxes on some urban properties. It’s also helping a number of countries and institutions set up an African Tax Administration Forum to be launched in Kampala, Uganda, in November.

    "They would first [agree on a set of] principles," he explains, "and [assess] how much they lose from tax evasion. So they’d be joining forces [to maximize savings reserves and reduce dependence on foreign aid]. They would set up capacity building programs to help administrations become more effective at negotiating and implementing tax policies, including toward foreign economic agents [companies], " says Solignac-Lecomte.

    Coordinating finance

    The G20 is also likely to discuss another issue that may affect taxation – the need for all countries to adhere to the same accounting practices.

    "There is a patchwork of accounting practices," explains John Kirton, Director of the G20 Research Group, based at the University of Toronto, Canada, "which makes it difficult for the average investor or citizen to read a company’s balance sheets and compare them across countries -- even if it is the same company doing business in different countries. [The question is] which standards are they following?"

    Kirton says it’s not clear summit that delegates to the meeting will discuss the ultimate way to enhance the budgets of developing countries – additional aid.

    So far, the G20 has promised U.S. $50 billion to support social protection measures, boost trade and safeguard development in low income countries. The OECD estimates Africa could get between $ 21 - $23 billion.

    Industrialized countries have also agreed to provide $300 billion over the next three years to multilateral development banks, including the African Development Bank (AFDB) in an effort to increase lending to low income countries. The World Bank and the AFDB have allocated up to $15 billion to be used in Africa.



    This forum has been closed.
    Comments
         
    There are no comments in this forum. Be first and add one

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Brexit Vote Plunges Global Markets Into Unchartered Territoryi
    X
    June 24, 2016 9:38 PM
    British voters plunged global markets into unknown territory after they voted Thursday to leave the European Union. The results of the Brexit vote, the term coined to describe the referendum, caught many off guard. Analysts say the resulting volatility could last for weeks, perhaps longer. Mil Arcega reports.
    Video

    Video Brexit Vote Plunges Global Markets Into Unchartered Territory

    British voters plunged global markets into unknown territory after they voted Thursday to leave the European Union. The results of the Brexit vote, the term coined to describe the referendum, caught many off guard. Analysts say the resulting volatility could last for weeks, perhaps longer. Mil Arcega reports.
    Video

    Video Orlando Shooting Changes Debate on Gun Control

    It’s been nearly two weeks since the largest mass shooting ever in the United States. Despite public calls for tighter gun control laws, Congress is at an impasse. Democratic lawmakers resorted to a 1960s civil rights tactic to portray their frustration. VOA’s Carolyn Presutti explains how the Orlando, Florida shooting is changing the debate.
    Video

    Video Tunisian Fishing Town Searches for Jobs, Local Development Solutions

    As the European Union tries to come to grips with its migrant crisis, some newcomers are leaving voluntarily. But those returning to their home countries face an uncertain future.  Five years after Tunisia's revolution, the tiny North African country is struggling with unrest, soaring unemployment and plummeting growth. From the southern Tunisian fishing town of Zarzis, Lisa Bryant takes a look for VOA at a search for local solutions.
    Video

    Video 'American Troops' in Russia Despite Tensions

    Historic battle re-enactment is a niche hobby with a fair number of adherents in Russia where past military victories are played-up by the Kremlin as a show of national strength. But, one group of World War II re-enactors in Moscow has the rare distinction of choosing to play western ally troops. VOA's Daniel Schearf explains.
    Video

    Video Experts: Very Few Killed in US Gun Violence Are Victims of Mass Shootings

    The deadly shooting at a Florida nightclub has reignited the debate in the U.S. over gun control. Although Congress doesn't provide government health agencies funds to study gun violence, public health experts say private research has helped them learn some things about the issue. VOA's Carol Pearson reports.
    Video

    Video Trump Unleashes Broadside Against Clinton to Try to Ease GOP Doubts

    Recent public opinion polls show Republican Donald Trump slipping behind Democrat Hillary Clinton in the presidential election matchup for November. Trump trails her both in fundraising and campaign organization, but he's intensifying his attacks on the former secretary of state. VOA National Correspondent Jim Malone reports.
    Video

    Video Muslim American Mayor Calls for Tolerance

    Syrian-born Mohamed Khairullah describes himself as "an American mayor who happens to be Muslim." As the three-term mayor of Prospect Park, New Jersey, he believes his town of 6,000 is an example of how ethnicity and religious beliefs should not determine a community's leadership. Ramon Taylor has this report from Prospect Park.
    Video

    Video Internal Rifts Over Syria Policy Could Be Headache for Next US President

    With the Obama administration showing little outward enthusiasm for adopting a more robust Syria policy, there is a strong likelihood that the internal discontent expressed by State Department employees will roll over to the next administration. VOA State Department correspondent Pam Dockins reports.
    Video

    Video Senegal to Park Colorful ‘Cars Rapide’ Permanently

    Brightly painted cars rapide are a hallmark of Dakar, offering residents a cheap way to get around the capital city since 1976. But the privately owned minibuses are scheduled to be parked for good in late 2018, as Ricci Shryock reports for VOA.
    Video

    Video Florida Gets $1 Million in Emergency Government Funding for Orlando

    The U.S. government has granted $1 million in emergency funding to the state of Florida to cover the costs linked to the June 12 massacre in Orlando. U.S. Attorney General Loretta Lynch announced the grant Tuesday in Orlando, where she met with survivors of the shooting attack that killed 49 people. Zlatica Hoke reports.
    Video

    Video How to Print Impossible Shapes with Metal

    3-D printing with metals is rapidly becoming more advanced. As printers become more affordable, the industry is partnering with universities to refine processes for manufacturing previously impossible things. A new 3-D printing lab aims to bring the new technology closer to everyday use. VOA's George Putic reports.
    Video

    Video Big Somali Community in Minnesota Observes Muslim Religious Feast

    Ramadan is widely observed in the north central US state of Minnesota, which a large Muslim community calls home. VOA Somali service reporter Mohmud Masadde files this report from Minneapolis, the state's biggest city.

    Special Report

    Adrift The Invisible African Diaspora