· The African Union (AU) Commission has stated that the ongoing COVID-19 pandemic has underlined Africa’s need to expand resource mobilization base
· The AU’s call came as part of the deliberations of African tax officials and policymakers who met virtually on August 26 and 27
The African Union (AU) Commission has stated that the ongoing COVID-19 pandemic has underlined Africa’s need to expand resource mobilization base. The statement revealed that the African countries faced a fall in tax revenues, especially from the non-digitalized sectors. The loss of revenues was further aggravated by the decline in the prices and demand for commodities and the impact of the pandemic on the travel and tourism sectors, which are the main tax revenues earners.
The AU’s call came as part of the deliberations of African tax officials and policymakers who met virtually on August 26 and 27 as part of the High-Level Policy Dialogue, hosted by the AU Commission.
Africa’s GDP growth is estimated to be between -4.9 percent and -2.1 percent in 2020. which is a fall of between 135 billion U.S. dollars and 204 billion U.S. dollars from pre-COVID-19 GDP of 2.59 trillion U.S. dollars. According to the African Development Bank (AfDB), COVID-19 pandemic will push between 28.2 million and 49.2 million more Africans into extreme poverty.
The contracting economies mean weaker fiscal positions for governments across the continent at a time of maximum need, the AU said. It also forecasted a likely fall in overseas development assistance as donor countries face their own cash crunch in the midst of economic turmoil. AU urged African economies to take” a closer look at the proposals for the taxation of the digital economy and their likely implications for revenue collection for the continent’s states,”.
The AU also emphasized the need for collaborations among tax practitioners on the continent and pursue tax measures to “shore up revenue that will foster economic development and bridge the gap that will arise due to a reduction in aid.”
