By Aimee Dushime & Gifty Asmah Lama
Over the years most African countries have depended heavily on foreign aid and other forms of foreign support.
This situation of dependency by most African countries has not led to development nor has it alleviated extreme poverty from the continent. Most developed nations such as USA, China, Germany, Canada, etc., depend heavily on domestic revenue to provide basic services to its citizens.
This shows that self-reliant states are capable of achieving economic growth and development, which create job opportunities for the youth and relieve citizens from extreme poverty.
Similarly, in Africa, countries such as Rwanda, Mauritius, among others, that are gradually moving towards enhancing domestic revenue mobilization growth are becoming sustainable than those which are heavily donor-dependent.
With Africa holding the world’s youngest population by 2050, it is essential that the younger populations are aware of the importance of taxes in nation-building, economic growth and poverty minimization.
The 2015 Organization for Economic Co-operation and Development (OECD)/ International and Ibero-American Foundation for Administration and Public Policies (FIIAPP) report revealed that most developing countries and least developed countries are striving more than ever before to generate more tax revenue.
In light of the shrinking donor support, a country’s own resources are needed to achieve sustainable development, minimize poverty rate, reduce inequalities, improve public services, and build infrastructure for inclusive growth.
As a starting point, one of the practical ways of promoting domestic resource mobilization is to foster an overall culture of tax compliance that is based on citizens’ rights and responsibilities, where citizens’ view paying taxes as an essential part of their relationship with the government and at the same time hold the government accountable for taxes paid to them.
In an attempt to promote tax literacy in Liberia, the Liberia Revenue Authority (LRA) has put in place tax education programs but perhaps due to limited resources, LRA has not fully exploited tax education platforms such as the media, schools, churches, etc. Unfortunately, statistics from the LRA has shown that despite the efforts made, domestic revenue collection by LRA for the past five years has on average been 450.9 million United States dollars while the average approved target for the past five years has been 473.5 million United States dollars.
Comparably, tax revenue collections by Rwanda Revenue Authority (RRA) for the 2018/19 fiscal year amounted to Rwf 1398.8 billion compared to the targeted Rwf 1373.1 billion which is means that it collected Rwf 25.7 billion above the target. For the 2019/2020 fiscal year, RRA projects collections of up to Rwf1, 535.8 billion, representing 54.1 per cent of the national budget which is Rwf2, 876.9 billion.
Perhaps this is an indication that in the near future, Rwanda’s budget will primarily be financed domestically. Importance of Taxpayers’ education Taxpayers’ education is vital and there is a need for both government and tax administration to develop innovative taxpayer’s education programs and campaigns that will inform and engage both the current and potential taxpayers. It is very important that the next generations are aware of taxes and its importance to the economic growth of any country.
For instance, there have been success stories from countries around the world on the impact of tax education initiatives in countries like Kenya, Morocco, Mexico, Malaysia, and El Salvador, (OECD, FIIAPP, 2015).
Evidence from Kenya Revenue Authority shows that within three years (2012-2015) over 25,000 students and 400 teachers were reached through these outreach programs which led to a positive recognition and appreciation of the benefit of taxes by more citizens.
Taxpayer education programs should not merely be used as a strategy for collecting more revenue or as an opportunity to exclusively explain why taxes should be paid. Rather, revenue authorities should reinforce tax education programs with the aim of strengthening attitudes of commitment to the common good by emphasizing the social value of tax and its relation to public expenditure.
The importance of taxation cannot be overemphasized as economic analysis have shown that taxation remains a strong socio-political and economic tool for economic growth and national prosperity. As such, African governments should invest heavily in revenue authorities around the continent to who will in turn educate citizens on their responsibilities and obligations. Similarly, the attitude of transparency and accountability should be embraced by governments across the continent so as to motivate current and future taxpayers.