Geingob calls on AU to close tax loopholes

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Windhoek

President Hage Geingob has called on African Union (AU) leaders gathered in Kigali, Rwanda to ensure that the AU is funded from domestic resources to reduce reliance on donor funding and also called on African governments to tighten the tax loopholes that allow corporations and individuals to extract vast amounts through illicit outflows.

Reminding his audience that “he who pays the piper dictates the tune”, President Geingob said: “We have to move away from a situation where we are over-reliant on development partners for our funding needs, if we want to chart a sustainable development path that reflects our priorities.”

He reminded fellow Heads of States and Government that the financial status of the AU “is precarious” and the need for financing would only increase in years to come.

“While most of our economies were weak during the founding years of the OAU (now the AU) when we had to depend on partners for financing, the situation has changed. Many of our economies have graduated from least developed to so called middle-income countries and there is less appetite from our partners to contribute to our financing.

“Moreover, development assistance tends to be counter-cyclical, drying up when it is most needed. It, thus, does not augur well for sustainability. This is a reality that we have to face. At the same time, we have to interrogate the use of this unfair classification by the World Bank and UN agencies. The reality is that one cannot capture development in a single economic indicator. We need a dashboard of indicators.

“If not, I foresee a situation, where just like Namibia, many more of our countries will be denied developmental assistance, simply because they have graduated to middle-income status.”

He said: “Our view is that we should first and foremost rely on our own domestic sources to fund our operations. This will, of course, require that we have to strengthen our tax systems to collect more revenue.”

He further said it should be the prerogative of AU Member States to decide which taxes should be earmarked for remit to the AU, noting that a “key source for funding that should be explored with urgency is the need to curb illicit financial outflows. It is estimated that up to 60 percent of these illicit outflows originate from tax avoidance and evasion,” he noted.

“The total amount of illicit outflows is much higher than the total donor assistance to the African continent. Tax administration to improve compliance is, therefore, required. In parallel, cooperation across borders is needed to follow and retrieve illicit outflows.”

“Ultimately, our revenue positions will improve if our economies are on higher growth trajectories. Here we are kept behind by aging infrastructure, in particular, roads, rail, water and electricity. While problematic it also presents enormous opportunities for cross-border infrastructure development,” he noted.

“Our challenge remains with regard to peacekeeping operations that are extremely expensive. Here we should continue to strengthen our governance architecture, by putting in place transparent and robust processes, systems and institutions required to prevent us from spiralling into conflict. In the meantime, we call on the United Nations to increase its contribution to peacekeeping operations in Africa,” he said.

President Geingob further called on AU Member States to pay their dues on time, as well as any arrears as soon as possible.
“Now more than ever, we must act with a sense of urgency, and move away from planning to actual accelerated implementation. In Namibia, we have declared this the year of implementation and I would like to challenge us all here to adopt same for the AU.”

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