2-3 May 2024 (Pretoria, South Africa) – Tax is central to the development of the African continent. Unlike debts and aid, which often come with conditionalities, tax is the most sustainable and predictable source of government revenues. Worrisomely, African countries have not been able to raise adequate tax revenues to fund the development they are yearning for. The current financial global architecture has been designed to put the African continent in the peripheries. To dismantle the unfair financial architecture, ongoing efforts are to develop the UN Framework Convention on International Tax. In these processes, civil society organisations (CSOs) including professionals like lawyers have a role to play. To effectively do this, they must be equipped with the requisite skills and a profound understanding of political and technical tax issues. In a bid to contribute to this, the WU Global Tax Policy Centre (WU GTPC), the African Tax Institute, and the Tax Justice Network Africa (TJNA) hosted a Summer School in Pretoria South Africa.
Under the theme, “Emerging Issues on The International Tax Agenda: The Changing Environment Within Which Tax Justice Is Operating” the participants discussed pertinent issues that included but were not limited to the changing environment within which tax justice is operating, international tax reform, trade-related illicit financial flows, taxation of high net individuals and lastly opportunities and risks of new technologies in tax. PALU’s participation in the training was crucial, considering the legal profession’s role in facilitating illicit financial flows and its potential to contribute to addressing the inequities in the global tax system.
What came out clearly from the training was that the current tax architecture is convoluted, challenging to implement, lacks inclusivity and universality, and imposes financial constraints on African countries. Consequently, the establishment of a UN Tax Convention is poised to enforce binding, fair standards on international tax cooperation, financial transparency, and tax justice globally. Through a UN-driven process where each nation holds equal voting rights — as opposed to a system where financial contributions determine influence — the Convention aims to ensure equitable representation and prioritize the interests of all countries over the influence of the wealthy and powerful.
CSOs play a significant role in tax processes and debates. They have been actively engaged in challenging the inequitable global tax architecture by advocating for initiatives such as the UN Tax Convention. Despite notable progress, there remains much to be done to ensure that forthcoming processes and outcomes reflect the needs of African citizens and the Global South, who have historically been disadvantaged.
Understanding the historical context of taxation and past processes in global tax governance is essential. It sheds light on global power dynamics, elucidates the implications of tax policies and platforms on the African continent, and informs future actions aimed at challenging the unjust global tax architecture.
Tax issues may be technical, but they are inherently political. Taxation decisions are made within a political context, with implications for international relations and global economic governance. Political ideologies and priorities profoundly shape tax policies, and the allocation of tax revenues through national budgets is inherently political.
Speaking with one voice on tax matters empowers African countries to leverage their collective strength, bolster their influence in global tax governance, and tackle shared challenges more effectively. Through fostering collaboration and coordination, African nations can collaboratively contribute to developing fair, transparent, and sustainable tax systems that underpin economic growth and development across the continent. As Africa advances towards becoming a rule-maker rather than a rule-taker, unity and active participation from stakeholders are imperative to address systemic challenges in global tax governance.
Professionals wielding knowledge, power, and influence play a pivotal role in perpetuating or dismantling the existing unfair tax system and the global political economy that facilitates it. The role of lawyers and financial sector professionals such as accountants, auditors, and bankers in enabling abuses such as tax avoidance and evasion, trade abuse and unfair concessionary agreements, by global conglomerates and high net worth individuals, through among other things complex legal structures and special purpose vehicles was highlighted in both the Mbeki and FACTI High-Level Panel reports. Amid the evolving landscape of tax cooperation and in light of the role of professionals in unfair tax practices and fueling IFFs, lawyers hold a significant position in the UN Tax Framework Convention processes.
Following this training, PALU has joined a group of CSOs committed to developing a UN Tax Framework Convention. More so, in partnership with like-minded organisations, PALU shall be hosting a series of webinars that aim to raise awareness among lawyers about tax matters, encourage their active engagement in the forthcoming processes leading to the enactment of the UN Tax Convention, and help them understand how they can contribute effectively.