Effective resource management, ease of doing business imperative for tax development, says Afflu
The West African Union of Tax Institutes (WAUTI) is an association formed by the Chartered Institute of Taxation of Nigeria (CITN) and the Chartered Institute of Taxation of Ghana (CITG) with the objective of developing and promoting the taxation profession in West Africa. Mike Kofi Afflu is the current president of the association. In this interview with BUKKY OLAJIDE, Afflu spoke on the current issues in the tax industry and other related matters.
HOW far has WAUTI gone in developing and promoting taxation as the pivot for economic development as in other developed regions?
The task of promoting taxation in the region is a herculean one. Given the peculiar cycle of poor governance prevalent within the region, citizens have had to grapple with lack of basic infrastructure, unemployment, limited access to quality and affordable health care, and low purchasing power. In fact, most citizens live on less than $1 per day. It becomes difficult in the circumstance to convince the people to pay taxes to the government purse with myriad of unmet expectations. This notwithstanding, we have at every opportunity emphasized the need to accord taxation a prime place in governments' economic policies.
Within the short period of our organisation's existence, we have been privileged to embark on visits to some countries within the West African region including; Senegal, Ghana, Burkina Faso, Cote d' Ivoire and Nigeria. In the course of these visits, important stakeholders including government officials welcomed our delegation warmly and supported our message. Our constant admonition has been on the place of taxation in sustainable political and economic development. Another angle, of course, is the important role of taxation bodies in these countries. Furthermore, since WAUTI's establishment in 2011, two international Annual Tax Conferences have been organised in 2012 & 2013 on the themes "Taxation: Tool for Regional Development and Sustainability" and "The Role of Taxation in Good Governance" respectively.
The level of participation and knowledge sharing deepened the capacity of the participants. Communiqués were also issued at the end of the conference and disseminated to all key stakeholders in the sub-region. The Communiqués and paper presentations are also available at the Unions website www.wauti.org. Funding has remained our major challenge in reaching out to all stakeholders as we would have wanted to.
What efforts are you making to make WAUTI a platform for developing and harmonizing tax policies in West Africa?
There is an adage that "A Journey of a thousand miles begins with one step." To this end, two of the presentations at our Annual Tax Conferences were hinged on this subject of harmonisation of tax policies, notably "The Role of Taxation in Good Governance Towards Uniformity of Taxation within the ECOWAS Region" presented by Mr. Jiri Nekovar, President, Confederation Fiscale Europeenee and "Harmonization of Regional Tax System: Challenges & Prospects" presented by Mr, Salifou Tiemtore, Director of Customs, ECOWAS Commission. We have also commenced the process by encouraging tax professionals of each country to form tax professional bodies.
This is being vigorously pursued by the organisation. When we achieve a substantial measure of success, we can then under the auspices of the organisation take a look at the tax systems in the respective countries, identify areas of similarities, areas of conflict, make informed comments and suggestions which can be adopted by member-bodies. The result of our collective action can be presented in a holistic manner to the individual countries and the regional group, ECOWAS, for adoption and implementation. Ultimately, this will take years to accomplish. But as the saying goes, it is better to be late than never.
Do you think West African countries' tax laws are being operated in line with global best practices?
Yes they are. As is evident the current international best practice in taxation includes transparency and accountability. In this vein most West African countries have passed Transfer Pricing laws and regulations to deal with transactions that lack tax transparency. Again most West African countries have Double Taxation Agreements as well as Tax Exchange Information Agreements with other countries to facilitate exchange of tax information to aid transparency as well as assist our governments mobilize the needed domestic resource for the development of the sub-region by preventing abuse of our tax systems.
The lacuna in global best practices, which our organisation intends to abridge, is the near-absence of inter-State collaboration in terms of exchange of information and bilateral or multilateral taxation agreements among West African countries. In other words, West African countries find it more convenient to relate with countries from other regions in the areas of Double Taxation Agreements and Exchange of Information than among themselves. This is something our organisation is already studying with a view to taking remedial measures.
How can West African countries key-in to the new global tax order?
The new global order is challenged by lack of resources for developing countries owing to such backlash as the credit crunch, natural disasters in donor countries. West African countries thus have to enhance and improve domestic resource mobilization for their development, more so when some of them have attained middle income status and have to be weaned off donor support.
West African countries can also key in on their strengths of managing their revenue inflows from their vast natural resources so as to leverage on the reduction in donor support. The cost of doing business is West Africa should also be reduced to attract more foreign direct investment while sustaining the needed peace and stability in the sub-region to give investors the level of confidence and assurance they require to invest in our countries to assist in the growth of our economies.
These recommended measures will, in fact, not be possible unless there is sustained democracy and good governance, which entails waging war against corruption of the elite, a factor that has rendered many economies in the sub-region comatose.
What steps are you taking to network with global tax institutes?
One of the cardinal objectives of the Union is to collaborate with other bodies with a view to leveraging on their reach towards information sharing and collaboration for our collective benefit. In this regard, we have reached out to key international organisations devoted to the enhancement of the taxation profession. In April 2012, we attended the Spring Conference/Meetings of the Confederation Fiscale Europeenne, the umbrella body of tax advisers in Europe. The platform provided an opportunity for us to network and share experiences on a wide range of issues including the challenges encountered by our body in its formative years. We also seized the opportunity to push for the resuscitation of the moribund World Tax Conference. Only recently, the President of the CFE, Mr. Jiri Nekovar was in Lagos as the Lead Speaker at our second International Tax Conference.
It is expected that this relationship will be sustained and a working relationship established for the benefit of both bodies. We are also in close contact with the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA) based in Dakar, Senegal. Discussions have been initiated with the body on the possibility of training of officers of the body. Invitation by SAIT to participate in the Transfer Pricing Summit in South Africa is also an opportunity to network with other countries and institutions. We hope to explore other areas of cooperation in the near future.
In September 2013, our representatives shall be attending the CFE International Assembly of Tax Advisers Conference in Russia, which is another opportunity to interact with tax institutes from all regions of the world.
How do you intend to address the phenomenally low tax awareness in West Africa?
This question has always come to the fore since the establishment of the organisation. We have come to realise that this responsibility lies not just with the organisation, but also with all stakeholders including the citizens themselves, government, professional groups, traditional institutions and educational bodies. Having said so, we will also continue to lend our voice (through advocacy, Annual Tax Conference, presentations) to that of other like-minded bodies on the need for the citizens to be aware of their responsibility to pay taxes as part of their social contract with the government.
As time goes on, we will be embarking on enlightenment programmes in conjunction with member-bodies towards enlightenment of the citizens on this subject. Also of concern is that governments should think outside the box to break the mono-product economy in most West African countries. In this regard, taxation is the tool for optimum economic planning globally.
Some West African countries are yet to have tax institutes. What is WAUTI doing about this?
This has been a top-most priority of the organisation from commencement of its activities. We have made modest gains in this respect. This is without saying that a whole lot is yet to be achieved. What we find in most countries in the region is that accountancy and taxation are subsumed under a single body as the case was in Nigeria and Ghana some years ago. With renewed consciousness and the need for specialisation, the status quo is changing. We have had meetings with some professionals in West African countries without taxation institutes, and we are happy to note their enthusiasm and drive in this direction. Presently, we have associations of tax professionals in Mali, Burkina Faso, Senegal, Liberia and Niger. Others such as Cote d'Ivoire, Togo and Benin are in the process of having their own associations. Most importantly, we want them to be legally recognised and chartered by their governments to enable them to be empowered to regulate the taxation profession in their respective countries. All these are as a result of the modest efforts being made by the organisation in close association with individuals in the countries concerned.
For ECOWAS to establish a monetary union, its members need to agree on a minimum 20 percent ratio of revenue to GDP, yet only Cape Verde and Ghana had met the criteria, other 13 countries fell below 20 per cent. What's your position on this?
This is one of the areas where the organisation is of importance since experiences can be shared and research conducted into how the two countries succeeded in attaining the targets so others can emulate. The various tax institutes in West African countries share ideas and research data and information through workshops and seminars through which they can advice in their home countries on the way forward. They assist the revenue institutions in their countries as well as work along with them to improve tax revenue collection so the revenue to GDP ratios can improve.
Most economies under the West African Monetary Zone have less productive force and are generally weak. Don't you think this could pose a challenge to the establishment of the sub-regional currency?
Everything is possible once there is the will and zeal to put our acts together to achieve the set goal. Once the issues militating against the successful launch of the Eco have been identified we need to get West African states to embark on a capacity building drive so we can get the productive and strong force we desire for success. In a pragmatic sense, however, the Eco, in the short run, will encounter many challenges in its implementation if the European Union "Euro" experience, and the ECOWAS Free Movement Protocol implementation are lessons to learn.
What is your opinion about the second Eurobond that Ghana just floated?
It is a welcome relief as most ongoing infrastructural developments in Ghana are the target for the application of the funds. In this way the economy is boosted to grow and be able to raise enough revenue to pay back the interest as well as the amount raised in the foreseeable future.
Can Ghana's discovery of oil turn out to be a challenge to its growth plan as being projected by some analysts?
The key to a resource rich country being curse free hinges on transparency and accountability, not only in the negotiations and signing of agreements between contractors and the government, but also transparency and accountability in the management and use of the revenues emanating there from. Ghana has a lot to learn from both successful countries as well as countries that have failed in attaining the above, hence has in place the requisite laws and institutions to ensure transparency and accountability. The laws governing the sector are being reviewed to achieve these hallmarks and the requisite institutions have also been established, that is, the Petroleum Commission and the Public Interest Accountability Committee. I thus, have no doubts in my mind that Ghana will succeed in this regard, that is, to be rich and curse free.
The current drive by the Ghana Revenue Authority (GRA) to bring awareness of tax obligations to specific groups of tax payers and other measures put in place to strengthen the existing tax offices is a clear indication that government still realizes the importance of domestic tax revenue.
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