2015 INTERNATIONAL PUBLIC SERVICE DAY:

Keywords : ILLICIT FINANCIAL FLOWS - “STOP THE BLEEDING” Declarations

IMPLEMENTING THE MBEKI PANEL REPORT ON ILLICIT FINANCIAL FLOWS
AND PUTTING PUBLIC SERVICES AT THE HEART OF AFRICA’S
DEVELOPMENT AGENDA

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STATEMENT in PDF

The African Regional Organisation of the International Trade Union Confederation (ITUCAfrica)
joins public service workers all over the world to commemorate this year’s
international Public Service Day.
For us at ITIC-Africa, the public service represents a critical sector for development and all
efforts must be applied in using public service delivery to improve the wellbeing and
welfare of people.

We note that 2015 is a busy year for global discourses and processes around development,
some of which will be concluded. For instance, the United Nations Sustainable
Development Goals framework will be concluded and adopted in September. There is also
the 3rd Finance for Development Summit that will be taking place in Africa, significantly
for the first time on our continent.

These development processes are not happening in isolation, but are rather feeding into
other existing and on-going development discourses and processes at the national and
continental levels. Importantly, in January this year, the AU-ECA report on Illicit Financial
Flows in Africa was adopted during the AU Heads of State summit in Addis Ababa. For us
at ITUC-Africa, this report by a panel chaired by former South African President, Thabo
Mbeki, is a very important document that provides pointers to how Africa can effectively
finance its structural transformation agenda.

Specifically, the report noted that an average figure (conservative) of US$50 billion is lost
to Africa every year, and that as much as two-thirds of that amount is lost due to
manipulation of commercial transactions rather than criminal activity or corruption. That
means that tax evasion and tax avoidance (e.g. using tax havens to shelter profits that would
otherwise be taxed by African countries) are costing the continent up to $50 billion
annually.

This revelation speaks to the argument that we have been advancing: that the best way to
ensure that our governments can set the agenda for improving public services and achieving
sustainable development is to mobilize domestic resources through a strong progressive tax
base. This is a core issue of sovereignty and self-determination. Progressive tax justice
policies mean African countries can be financially self-sufficient and free from aid
dependency.

Thus, reforming national, regional and international tax systems and removing counterproductive
tax incentives will lead to substantially increased budgets for African countries
to finance the post-2015 Sustainable Development agenda and pay for improved public
services including education, health care, clean water and sanitation, housing and
transportation, as well as other development initiatives.

As we approach the Third Finance for Development (FfD3) billed to take place in Addis
Ababa next month, we wish once again to call on African governments to take the initiative
to work together to ensure that outcomes from the Summit will impact our structural
transformation agenda. We hope the summit accepts the AU-ECA report on Illicit Financial
Flows from Africa as a vital document on how to plug and stop the financial haemorrhage
of developing economies. Africa must speak with one united and strong voice to say enough
of the bleeding and to demand ample policy spaces for national and regional state driven
interventions.

On internal tax mobilisation efforts, we call on African governments to ensure that
companies doing business on the continent pay their fair share of tax on the economic
activities that they undertake. Whether companies are extracting minerals, or setting up
factories, or selling goods or services, we deprive our people of their basic needs and human
rights if we don’t ensure corporations pay their fair amount of taxes.

We equally urge African governments to commit to reviewing the tax incentives being
offered to multi-national companies. While these are not classified as “illicit flows,” the
High Level Panel has identified these incentives as a major additional source of lost
revenues – that can easily be reduced by African governments’ action.

It is estimated that the money given up globally by governments to corporate income tax
incentives alone is $138 billion (source: ActionAid). In the World Bank’s recent Investor
Motivation Survey for the East African Community, 93% of investors said that they would
have invested regardless of the incentives available. Despite what corporate lobbyists often
claim, providing tax incentives to large foreign companies is almost always bad business for
African countries. We call on our governments to strictly limit the use of discretionary
incentives and provide transparent explanations and parliamentary reviews of incentives
when they are used. We also ask that our governments engage in regional coordination to
reduce harmful tax competition across borders.
This will prevent companies and rich individuals from depriving our economies of public
revenues that can pay for basic public services such as education, potable water and health
care.

We urge African governments to unite for progressive tax reform and challenge the rest of
the world to make tax systems fairer to help end poverty and inequality. Adequate revenue
flows aligned to a well-articulated structural transformation strategy can assist Africa to
curtail dependency on aid, provide better public services to our people, and gain stronger
control of our path to sustainable development.

Issued on 22nd June, 2015

Kwasi Adu-Amankwah

General Secretary

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