Doha Financing for Development Conference - Mobilising Domestic Resource Revenues

Side event - The Accra Agenda for Action

29 november, 13:00-15:00

The second session focused on Mobilising Domestic Resource Revenues

• The Panellists outlined the need for both equitable and efficient revenue raising to bolster developing country legitimacy in the eyes of their own people.

• However, significant challenges arise: extractive industries are  dominated by foreign players who pay tax only in their countries of domicile; systems for collecting royalties are often absent or inefficient; and elites, beginning with ministers and parliamentarians themselves, often do not pay tax.

•  More aid should be channelled to improving domestic revenue. Of the $103 bn ODA in 2006, only $88 million was related to increasing tax capacity. It was noted that the political price of failing to do so should be high. The example of Netherlands was given, where high aid levels are mandated by legislation.

• The creation of the African Tax Administrators’ Forum was praised, offering African tax officials an opportunity to share information and stimulate action to increase the tax/GDP ratios of African countries over time.

• Suggestions to boost more predictable domestic revenue streams included requiring companies to pay tax in the countries in which they earn revenue, rather than in the country of domicile; fostering greater reliance on royalties as a means of countering transfer pricing arrangements that avoid tax in the countries of exploitation; granting tax amnesties to collect some revenue where none is being raised; and broadening the tax base so as to avoid the high rates of tax that encourage avoidance and ensure greater resilience of revenues during downturns.