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Should Africa’s billionaires pay more tax?

Posted on Wednesday, 30 November 2011 16:23

As momentum from the Occupy Wall Street protests spreads across the globe, pressure is mounting on the world’s richest 1% to pay more tax.

We’re asking if, after US tycoon Warren Buffett’s challenge to the world’s mega-rich to pay more tax, should Africa’s billionaires take up his call? Join in the debate below.

YES: Vera Mshana, policy and advocay officer, Tax Justice Network for Africa

All Africans should equitably share the responsibilities of creating the kind of societies we want, and what we want has increasingly been articulated in national development strategies, such as Kenya’s Vision 2030. In the context of taxation, ‘equitably sharing’ means that those with a greater ability to pay should pay more income tax … Kenya’s billionaires should therefore expect to pay the most income tax as a proportion of their income in order to realise Vision 2030. This is neither a new nor revolutionary principle of taxation.

The problem with most African tax systems is that they are generally biased towards consumption and wage taxes, which impose a higher tax burden on poorer households and formal sector employees who cannot easily avoid paying such taxes. As the saying goes, a tax system can never make a rich person richer, but it can certainly make a poor person poorer. Tax policy must also be deliberately aligned to national development strategies to avoid creating tax systems that are built on the backs of those with the least means, which is counter-intuitive, unfair and less likely to deliver the kind of society we want.

NO: Kalaa Mpinga, chief executive, Mwana Africa

Absolutely not … In Africa, most of the countries probably have the top 5% paying 90% of the taxes. If you look at the majority of the African countries, the few companies that are operating in the formal industry will tell you that their first area of concern is over-taxation. Governments are very good at making up all sorts of taxes left, right and centre. What you need, in fact, is to decrease and simplify the tax structure that the top companies and top earners have. The issue in Africa is more about bringing more people into the tax net…

I don’t know if there is any country in the world where the taxpayer believes their money is well-used. I don’t know why Africa would be different than anywhere else.

The few people who have the means spend half of their time trying to fight spurious tax claims, so I think what you need is to find a system that is very simple and that is an incentive for people to come and pay rather than harassing those people who are trying to work.