African states talk tax

2005-08-24 13:13

Addis Ababa - A four-day meeting of African tax officials opened on Wednesday in the Ethiopian capital to discuss how to increase collection and exchange experiences.

Some 100 participants from 12 African member states are taking part in the Forum of Value Added Tax Administrators in Africa (VADA) meeting.

In addition to exchanging experiences of tax reform measures, the forum plans to consider solutions to "grass-roots problems peculiar to Africa", said host Woldegabriel Naizghi, general manager of the Ethiopian Federal Inland Revenue Authority, at the opening of the gathering.

The value added tax (VAT) system was imported from Europe and needs to be adapted to the social, economic and cultural norms, values and level of development of African countries, Naizghi said.

Naizghi suggested "a fair and modern tax administration in which citizens discharge their tax obligation on a voluntary compliance basis".

As VAT serves as an efficient and fair instrument for generating more government revenues, African nations "should stand firm to protect the VAT system from failure caused by poor tax administration", Ethiopian Minister for Revenues Getachew Belay said in his keynote address.

Ethiopia had benefited a great deal in improving its tax collection since joining VADA, particularly with the support of Tanzania and Namibia and multilateral donors, Belay said.

The donors include the United Nations Development Programme (UNDP), the EU, Britain's department for international development (DFID) and the United States Agency for International Development (USAid).

He stated that the Addis Ababa deliberations of the eighth VADA forum should come out with an African VAT system "that fits the socio-economic situations of the continent".

Ethiopia has improved its revenue collections over the last two years since the introduction of VAT, averaging an increase of 28.27% annually, government statistics show.

In the 2004-05 fiscal year that ended in June, tax collection accounted for 43% of the total tax collected by the Federal Inland Revenue Authority, it was disclosed at the gathering.

It amounted to some 1.54bn birr (US$177.8m) of the total 3.8bn birr collected in revenues during the year.

The seventh VADA forum was held in 2004 in Abuja, Nigeria, the country that currently holds the chairpersonship of the group.

Cote d'Ivoire, which has applied for membership of VADA, was also attending. - Sapa-dpa

- SAPA