Experts urge East Africa states to harmonize tax regimes to spur growth NAIROBI (Xinhua) -- The five East African Community (EAC) member states should harmonize their taxation laws and policies to boost cross border trade, investments and job creation, policy analysts and tax experts said on Monday. “Real economic growth in the east African region will only be realized if countries reformed the customs environment to make it friendlier to investors and promote regional trade,” Senior Manager, Indirect Taxes, Ernst &Young, Hadijah Nannyomo. Speaking during a post budget seminar in Nairobi on Monday, Nannyomo noted that a reform of the taxation regime will boost revenue collection, competitiveness and economic growth across east Africa. The five east African member states presented their 2013/14 budget statement to parliaments last week. Financial experts observed that countries in the region have focused on expanding the tax bracket to finance both the recurrent and development expenditure. “What came out of the budget statements last week was an increased focus on raising taxes to finance ambitious development projects like infrastructure, agriculture and a host of social amenities,” Nannyomo said in Nairobi. She urged governments to seal loopholes responsible for misappropriation and loss of taxpayers’ money. The East African region could become a giant trading bloc if governments accelerated the move towards a customs union. Nannyomo noted that export led growth in the region would be realized if countries agreed on duty exemptions to strategic export commodities including tea, coffee and flowers. “High taxations, unnecessary restrictions and red tape are some of the hurdles that should be addressed to boost our competitiveness in the world market. Governments should develop a uniform legal framework to streamline duties levied on export commodities,” said Nannyomo The economic experts also called on the East African governments to reform their tax policies and laws in line with changing social and political dynamics. The Institute of Economic Affairs CEO Kwame Owino, stressed that an arbitrary hike in taxes has a political and social consequences. “There is no denying that our governments require additional resources to foot the wage bill and finance development projects. However, any increase in taxes should be accompanied by legal safeguards to avoid a backlash from the public,” Owino said. East African states could increase duty on basic commodities to help finance ambitious programs like free primary education, basic health, roads, water and electricity. Owino noted that all the East African Community member states factored on domestic sources of revenue to help meet a rising wage bill and implement infrastructural projects. “There is likelihood of an increase in duty for basic commodities like maize flour, kerosene and cooking fat to help plug budget deficit. East African states are in a dilemma on how to sustain economic growth without placing a heavy tax burden on citizens,” Owino told Xinhua. He noted that the East African States should streamline their tax regimes through efficient administration. According to a tax expert at Ernst &Young, David Wanyoike, there is need for governments in the region to establish incentives that promote efficient revenue collection and utilization. “Expanding revenue base through taxing non-traditional areas like the informal sector will enable governments plug the budget deficit,” Wanyoike said. Courtesy of the Coastweek.
Posted on: Tue, 25 Jun 2013 07:57:22 +0000
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