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.
Olympics Construction Scars Sacred Korean Mountaini
X
July 02, 2015 4:10 AM
Environmentalists in South Korea are protesting a Winter Olympics construction project to build a ski slope through a 500-year-old protected forest. Brian Padden reports that although there is strong national support for hosting the 2018 Pyeongchang Winter Olympics, there are growing public concerns over the costs and possible ecological damage at the revered mountain.
Video

Video Olympics Construction Scars Sacred Korean Mountain

Environmentalists in South Korea are protesting a Winter Olympics construction project to build a ski slope through a 500-year-old protected forest. Brian Padden reports that although there is strong national support for hosting the 2018 Pyeongchang Winter Olympics, there are growing public concerns over the costs and possible ecological damage at the revered mountain.
Video

Video Xenophobia Victims in South Africa Flee Violence, Then Return

Many Malawians fled South Africa early this year after xenophobic attacks on African immigrants. But many quickly found life was no better at home and have returned to South Africa – often illegally and without jobs, and facing the tough task of having to start over. Lameck Masina and Anita Powell file from Johannesburg.
Video

Video Family of American Marine Calls for Release From Iranian Prison

As the crowd of journalists covering the Iran talks swells, so too do the opportunities for media coverage.  Hoping to catch the attention of high-level diplomats, the family of American-Iranian marine Amir Hekmati is in Vienna, pleading for his release from an Iranian prison after nearly 4 years.  VOA’s Heather Murdock reports from Vienna.
Video

Video UK Holds Terror Drill as MPs Mull Tunisia Response

After pledging a tough response to last Friday’s terror attack in Tunisia, which came just days before the 10th anniversary of the bomb attacks on London’s transport network, British security services are shifting their focus to overseas counter-terror operations. VOA's Henry Ridgwell has more.
Video

Video Obama on Cuba: This is What Change Looks Like

President Barack Obama says the United States will soon reopen its embassy in Cuba for the first time since 1961, ending a half-century of isolation. VOA White House correspondent Luis Ramirez reports.
Video

Video Hate Groups Spread Influence Via Internet

Hate groups of various kinds are using the Internet for propaganda and recruitment, and a Jewish human rights organization that monitors these groups, the Simon Wiesenthal Center, says their influence is growing. The messages are different, but the calls to hatred or violence are similar. VOA's Mike O’Sullivan reports.
Video

Video US Silica Sand Mining Surge Worries Illinois Residents, Businesses

Increased domestic U.S. oil and gas production, thanks to advances known as “fracking,” has created a boom for other industries supporting that extraction. Demand for silica sand, used in fracking, could triple over the next five years. In the Midwest state of Illinois, people living near the mines are worried about how increased silica sand mining will affect their businesses and their health. VOA’s Kane Farabaugh has more in this first of a series of reports.
Video

Video Blind Somali Journalist Defies Odds in Mogadishu

Despite improving security in the last few years, Somalia remains one of the most dangerous countries to be a journalist – even more so for someone who cannot see. Abdulaziz Billow has the story of journalist Abdifatah Hassan Kalgacal, who has been reporting from the Somali capital for the last decade despite being blind.
Video

Video Texas Defies Same-Sex Marriage Ruling

Texas state officials have criticized the US Supreme Court decision giving same-sex couples the right to marry nationwide. The attorney general of Texas says last week's decision did not overrule constitutional "rights of religious liberty," and therefore officials performing wedding services can refuse to perform them for same-sex couples if it is against their religious beliefs. Zlatica Hoke reports on the controversy.
Video

Video Rabbi Hits Road to Heal Jewish-Muslim Relations in France

France is on high alert after last week's terrorist attack near the city Lyon, just six months after deadly Paris shootings. The attack have added new tensions to relations between French Jews and Muslims. France’s Jewish and Muslim communities also share a common heritage, though, and as far as one French rabbi is concerned, they are destined to be friends. From the Paris suburb of La Courneuve, Lisa Bryant reports about Rabbi Michel Serfaty and his friendship bus.
Video

Video Saudi Leaks Expose ‘Checkbook Diplomacy’ In Battle With Iran

Saudi Arabia’s willingness to wield its oil money on the global diplomatic stage appears to have been laid bare, after the website WikiLeaks published tens of thousands of leaked cables from Riyadh’s Ministry of Foreign Affairs. VOA's Henry Ridgwell reports.
Video

Video In Kenya, Police Said to Shoot First, Ask Questions Later

An organization that documents torture and extrajudicial killings says Kenyan police were responsible for 1,252 shooting deaths in five cities, including Nairobi, between 2009 and 2014, representing 67 percent of all gun deaths in the areas reviewed. Gabe Joselow has more from Nairobi.

VOA Blogs