Nick Shaxson ■ New report: Inequality, Tax and a Rising Africa?
From Tax Justice Network for Africa and Christian Aid, a new report entitled Africa rising? Inequalities and the essential role of fair taxation.
It investigates income inequality in Ghana, Kenya, Malawi, Nigeria, Sierra Leone, South Africa, Zambia and Zimbabwe: there has been little definitive analysis of income inequality trends on the continent. Its summary notes:
“The report looks at national taxation systems and international taxation issues – and, critically, the relationship between them. In this way it reveals how the enabling environment for tax dodging impacts on national tax systems in sub-Saharan Africa. It also dissects the trends in revenue generation, tax equity and tax reforms across the eight countries.”
And its conclusions? Among them:
” Increasing income inequality should be of huge concern to governments in at least six out of the eight countries – Ghana, Nigeria, South Africa, Zambia, Kenya and Malawi. In Ghana and Nigeria, income inequality is rising strongly. In Nigeria, between 1986 and 2010, there has been a 75% increase in the concentration of income in the country. In Ghana there has been a 50% increase in the concentration of income over an 18-year period.
In Zambia income inequality is now at its highest levels since data was collected. South Africa has one of the highest levels of inequality in the world and one which keeps increasing. The sharp rise in the incomes of the richest 5% is driving the increase at the top end. Yet there is no evidence of progress in tackling this inequality, or even much preoccupation with it, in South Africa’s new
National Development Plan.
This trend is not just a result of the rich getting richer. There is clear evidence that this is at the expense of the poor who are also getting poorer, and are therefore actively impoverished in this process. To make matters worse, we know that we are vastly underestimating the problem. As Tax Justice Network research has shown, both wealth and inequality are being dramatically underestimated to a very significant degree, in every study and in every country.
In this context of rising inequality, the role of taxation in redistributing income is particularly critical, with progressive tax systems being one of the most important tool available to governments. However, the report shows the extent to which illicit financial flows undermine this prospect.”