The Embassy had invited Mr. Odd-Helge Fjeldstad from CMI – a Norwegian based research and consultancy institute – to give the substantive input to the meetings. Mr. Fjeldstad presented findings from a comprehensive Norwegian research program on tax, aid and development that has taken place over several years and focused upon field work in Namibia, Tanzania and Uganda (click for more information).
The main topics and messages that came out from the seminar and workshops were the following :
· Tax authority employees are not only revenue collectors, but also state builders. ATM could in this respect become a model institution for the rest of the civil service. In the workshop ATM also shared their main strategies and the ATM’s extensive program for increasing tax voluntary tax compliance in the country. There are important links between taxation systems and state-building and development, taxation and governance in Africa.
· It is important to create a dialogue that can contribute to a wider debate on tax and development. While discussions about taxation have traditionally been a narrow and technocratic domain, we need to broaden the debate and to make people realize the importance of taxation for state-building and development.
· An improved tax system means increased state revenues. Tax revenues are generally more reliable and less volatile than revenues from natural resource rents and foreign aid. Experience shows that building tax administrative capacity can be a model for capacity building in other public institutions. Establishing a tax system that is transparent, fair and efficient, may over time work as a mechanism to hold political leaders accountable.
· There is a need to broaden the tax base, which is currently very narrow. It needs to include larger parts of the business sector. The informal sector is a challenge in this respect. However, measures initiated by the Mozambican revenue authority to include the informal sector in the tax base are promising.
· The challenge of widespread tax exemptions must be addressed. Tax exemptions granted to the political and economic elite undermine the credibility of the tax system and may also 'legitimize' tax evasion. Building taxpayer compliance requires fora where taxpayers and the revenue administration meet and discuss strengths and weaknesses of the current tax system. Securing better links between taxes paid and public services is particularly important in this respect.