Implementing wealth tax and wealth redistribution in Sub-Saharan Africa
By Khanyisa Mbalati
Sub-Saharan Africa is one of the most unequal places in the world, with significant levels of social, gender, and income inequality. Several countries in the region have a tax structure that is heavily weighted towards consumption taxes, which can be regressive and inflict a significant burden on those with low and middle incomes. Implementing progressive tax systems, whereby those with higher earnings pay a larger share in taxes, is one way through which governments might optimize the impact of tax revenue on reducing inequality. The adoption of a wealth tax may facilitate wealth redistribution in Sub-Saharan African nations and could help bridge the inequality gap in the region. High statutory wealth tax rates of between 5-8% are needed in order to have an effective tax rate of 3-5%.
Inputs – Special Rapporteur on the Right to Development
“Role of businesses in realising the right to development”
South Centre
June 2023
The Human Rights Council, in its resolution 33/14 of 29 September 2016, established the mandate of the United Nations Special Rapporteur on the right to development. In 2023, the Special Rapporteur will present a report on “the role of business in realising the right to development in the context of the 2030 Agenda for Sustainable Development and other relevant international human rights instruments” to the United Nations General Assembly in October 2023.
With the objective of collecting information regarding the role of businesses in realising the right to development, Prof Surya Deva, Special Rapporteur on the Right to Development, made an open call for inputs from various stakeholders such as States, international organisations, national human rights institutions, civil society organisations, and others.
In line with its programme of work, the South Centre is keen to submit the following information to the Special Rapporteur on the Right to Development considering the need to achieve progress on the fulfilment of social rights, in particular the Right to Development (RtD) and its interface with issues such as climate change, corporate responsibility, food security and small farmers’ livelihood.
Taxation of Digital Services: what hope for the African States?
By ADJEYI Kodzo Senyo, KOUEVI Tsotso and AMAGLO Kokou Essegbe
Globalization makes it necessary to adapt multinational taxation by taking into account the place of use or consumption of goods and services. “Pillar 1” of the OECD aims to allow States in which multinationals market products or services, or collect data and content from users, to benefit from a portion of their residual consolidated worldwide profit. Since residual profit is a function of the turnover and profit achieved in the jurisdiction, this solution can only be an advantage if, beyond the rules of fair taxation, efforts are made to promote the use of digital services. Internet access is one of the levers that can increase the consumption of digital services. The current situation in Africa according to statistics published by the International Telecommunication Union (ITU) shows low rates of internet access compared to other continents.
Strengthening efforts towards fulfilling the human right to food and the right to clean, safe and healthy environment
By Danish and Daniel Uribe
In the face of the unprecedented global crises that the world is currently facing, upholding and fulfilling the human right to food and a clean, safe and healthy environment have become critically important. The Human Rights Council (HRC) adopted two important resolutions on these issues in its 52nd Session, held from 27 February to 04 April 2023. The present policy brief discusses the implications and scope of these resolutions to strengthen and advance fundamental human rights, building resilience and promoting the role of multilateralism as a tool to face the triple planetary crises and recover better from the impacts of the COVID-19 pandemic.
Response to the Call for Inputs by the UN Special Rapporteur on human rights and the environment
“Should the interests of foreign investors trump the human right to a clean,
healthy and sustainable environment?”
South Centre
14 June 2023
To realize the right to clean, healthy & sustainable environment and reduce ISDS risks, States need to align their FDI policies with human rights, climate action and SDGs, including via reform of the international investment regime.
South Centre Statement to the Resumed session of the fifth meeting of the Intergovernmental Negotiating Body (INB) to draft and negotiate a WHO convention, agreement or other international instrument on pandemic prevention, preparedness and response
12 June 2023
The South Centre appreciates the opportunity to address this INB. We remain available, here in Geneva or online, to present our views on specific draft provisions.
We recognise the work advanced so far.
In the Bureau text, not all options are yet on the table. All Member State proposals, existing and new ones as they come, should receive proportionate consideration, inclusion and discussion.
The consolidated text of February should remain complementary to the Bureau text.
There must be balance in providing options under various articles and in the approach for legal language under them. The Bureau text as it stands now would not deliver on equity.
The INB is moving towards consensus on principles of equity, solidarity, common but differentiated responsibilities, transparency and respect for human rights. We also support the proposal for a principle on global public goods. The INB needs now to better translate these principles into concrete legal provisions in the text.
The drafting group during this session of the INB could focus discussion on Articles 9 to 13 of the Bureau text, also drawing from the consolidated text.
Member States Statements at the 23rd Meeting of the Council of Representatives of the South Centre
Geneva, 27 April 2023
This document includes the statement made by H.E. Mr. Thabo Mbeki, Chairman of the South Centre Board under agenda item 5 of the meeting “Statement by the Chairman of the Board of the South Centre”, the report made by Dr. Carlos Correa, Executive Director of the South Centre under agenda item 4 “Activities and finances of the South Centre: Report by the Executive Director”, and also interventions made by member countries at the meeting under agenda item 8 “General Statements from Representatives”.
The United Nations Intergovernmental Process – An Opportunity for a Paradigm Shift
By Kuldeep Sharma and Raunicka Sharma
Efforts are underway to strengthen the inclusiveness and effectiveness of international tax cooperation so that the current tax structures consider the equitable interests of developing countries. This is necessitated as a section of developing countries has lost confidence in the OECD and there is a lingering doubt whether OECD has developing countries’ best and equitable interests in mind. As a result, the United Nations General Assembly has launched intergovernmental talks to enhance international tax cooperation and draft a UN Tax Convention that aims to establish inclusive norms for transparency and tax cooperation, that leads to development of an acceptable and frictionless worldwide tax policy.
UN Model Tax Convention Article 26: Inequitable Exchange of Information Regime – Questionable Efficacy in Asymmetrical Bilateral Settings
By Muhammad Ashfaq Ahmed
The United Nations Model Tax Convention between Developed and Developing Countries (UN MTC) Article 26 charts out an exchange of information (EOI) regime “between developed and developing countries,” feigning that it is more favorable to the latter set of nations. Contrarily, the Organisation for Economic Cooperation and Development (OECD) MTC Article 26 is professedly geared to protect and promote interests of OECD members – “the club of the rich.” Even a cursory comparative look at the two MTCs intriguingly reveals lack of dissimilarities, and irresistibly leads to the conclusion that materially both provisions are identical. The situation gives rise to a paradox whereby developing countries that are completely at different levels of development have broken governance structures, convoluted fiscal and criminal justice systems and struggling tax administrations, have been yoked into a multilayered EOI regime, which stemmed from an intra-OECD statecraft imperative and is pre-dominantly beneficial to developed countries. The new normal contributes towards enhancement and deepening of the embedded inequities in the neocolonial economic order. The paper seminally dissects the strains generated by absence of dissimilarities between the two MTCs vis-à-vis Article 26, and posits that, in fact, this fundamentally being a developed country project, developing countries have been exploited as ‘beasts of burden’ merely to promote economic interests of dominant partners in the relationship, and by doing so, sheds light on and galvanizes the unjustness latent in the international taxes system – an inherently unequal and lopsided affair. It also delves deeper into an axiological normative evaluation of the extant EOI regime, and finding it untenable, urges a larger paradigm shift. In fact, the UN’s meek convergence with the OECD on EOI regime, ditching developing countries and leaving them to fend for themselves in this critical area of international taxation, is the scarlet thread of the paper.
Global Minimum Taxation of Multinationals: Opportunities and risks for some African States
By AMAGLO Kokou Essegbe, KOUEVI Tsotso and ADJEYI Kodzo Senyo
To face the challenges posed by the digitization of the economy, the OECD’s Inclusive Framework has developed two Pillars to address tax base erosion and profit shifting. The objective of Pillar Two is to define the minimum amount of tax to be paid by multinational enterprises in the jurisdictions where they operate. The OECD’s Inclusive Framework has adopted an average effective rate of 15% for this purpose. The objective of this study is to show whether the implementation of Pillar Two in African jurisdictions constitutes an opportunity or a risk for them.
The results show that it is an opportunity for countries with a low effective tax rate and a risk for countries with a high effective tax rate. Therefore, setting a 15% income tax rate for non-resident multinationals is an opportunity for some African countries. For it would constitute for these countries a source of additional tax revenue mobilization. For this reform to be an opportunity for Africa, however, the minimum effective tax rate must be raised to at least 20%, as was demanded by the African Tax Administration Forum (ATAF).
The risk that lies in the application of an effective rate of 15% for Africa as a whole is that some African countries might have to reduce their effective tax rate. This would be a loss of revenue for those African countries. Since most countries in the African jurisdiction have effective tax rates and statutory corporate income tax rates that are more than 20 percent, above the set average effective rate, multinationals would seek to shift their profits to the countries with the most advantageous taxation. This could lead to a transfer of profits to other jurisdictions.
A Response to COVID-19 and Beyond: Expanding African Capacity in Vaccine Production
By Carlos M. Correa
The unequal global distribution of vaccines against the deadly COVID-19 virus has cast a spotlight on the lack of access to vaccines on the African continent, and the vulnerability that such a lack places on both the economies of African nations and the health of their people. Various initiatives have been launched to overcome the dependence of African nations on vaccines produced elsewhere. If implemented in timely and effective ways, those initiatives will contribute to the diversification of African economies and strengthen the capacity of nations on the continent to address their public health needs during pandemics and at other times. While establishing a viable vaccine industry on the continent presents serious challenges, the African Continental Free Trade Area (AfCFTA) can provide the framework for leveraging economies of scale to stimulate the production of needed vaccines across the region.
