From JUDITH NAMUTOWE  –

in Addis Ababa, Ethiopia
ACTION Aid International has called for concerted efforts among African governments in addressing illicit financial flows (IFFs) on the continent.
Action Aid International Africa tax power coordinator Luckystar Miyandazi said there was need for African governments to work together in an effort to curb IFFs, which were impacting negatively on economies of the continent.
A report by the High Level Panel on IFFs, commissioned by the African Union (AU) and the Economic Commission for Africa (ECA) Conference of Ministers of Finance, indicates that Africa was losing more than US$50 billion annually through IFFs.
Ms Miyandazi said this during a media consultative roundtable meeting on tax and the impact of IFFs on domestic resources mobilisation which was  organised by Action Aid International.
This was on the sidelines of the African Development Week here.
She said Sub-Saharan African countries were giving away their taxing rights through the signing of very restrictive binding tax treaties with other countries.
“AU-ECA estimates that $246 billion additional financial resources are required to halve poverty and inequality simultaneously.
“Africa is losing $50 billion annually to IFFs which can be used to finance critical development projects and help reduce poverty and inequality in Africa,” Ms Miyandazi said.
She further said many developing countries like Zambia had opted to offer hefty incentives to potential investors as a way of attracting Foreign Direct Investment.
Ms Miyandazi said Action Aid had done numerous studies which had proved that tax incentives were not guided by cost-benefit analysis.
She added that tax incentives were actually a rare factor in multinationals choosing to invest in African countries.
Ms Miyandazi said for one, it was only an advantage to the already established big firms and multinationals at the expense of smaller domestic industries.
Ms Miyandazi said the loss of revenue from granting corporate tax incentives may lead governments to increase tax revenue through less just means, such as increasing the rate of Value Added Tax (VAT).
She gave an example of VAT which was added onto the cost of goods and services and could be collected relatively simple.
Ms Miyandazi said African countries had a responsibility to ensure that taxes were spent on public services that benefit everyone.