Uhuru calls for tax policy reforms to boost private sector

By Fredrick Obura

Sub-Saharan African governments have been asked to prioritise tax policy reforms to stimulate an efficient and dynamic private sector.

Finance Minister Uhuru Kenyatta has said better tax reforms are necessary to speedily enable governments generate additional revenue needed to finance better public service.

He said quick action would help grow the sector, an area key to creation of jobs and improving the living standards of the African people.

Deputy Prime Minister and Minister for Finance Uhuru Kenyatta chats with IMF Deputy Director African Department Mark Plant at a forum on revenue mobilisation in Sub-Saharan Africa. [PHOTO: COLLINS KEWYU / STANDARD ]

"Many tax authorities in Sub-Saharan economies still contend with common challenges such as lack of adequate capacity that plague tax systems of developing countries," he noted.

He said other challenges like the complex tax structure arising from many amendments, weak tax administration and corruption, and the low investment in ICT to promote efficiency and reduce compliance costs needed urgent attention.

"These challenges present an opportunity for reforming Africa’s tax systems to better facilitate the private sector and raise adequate resources to finance priority development," he said.

Uhuru called for special focus on tax administration to help raise additional resources required to finance priority social and economic programmes in areas of human and infrastructure development, necessary for sustained high economic growth and development.

Long-term sustainability

Speaking during a two-day conference hosted by International Monetary Fund (IMF) on improving tax revenue mobilisation, participants noted that an effective tax revenue collection could unlock resources in Africa for development.

"Fair and efficient tax revenue systems are essential for the long-term sustainability of public finances in low-income countries," said Carlo Cottarelli, IMF Director of fiscal Affairs.

"Effective revenue collection can unlock vital resources for African countries to tackle the root causes of poverty and promote long-term development in an equitable and transparent manner," he said.

To enhance its capacity to deliver technical assistance on revenue mobilisation and natural resource management, two new IMF topical trust fund financed by multiple donors are due to begin operating in May this year.

These will support some $55 million in technical assistance over the next years related to tax administration and managing resources.

The conference will provide an opportunity for senior government officials in charge of tax policy and administration to share experiences on what has worked well in enhancing revenue mobilisation and improving equity.