Education: ActionAid urges government to reduce harmful tax incentives

As the Pan-African High-Level Education Conference (PACE) commences in Nairobi, Kenya, ActionAid has urged governments in the continent to reduce harmful tax incentives that drain funding from education.
It also reminded them of the promises they made as part of the Sustainable Development Goals to deliver inclusive quality education for all by 2030. The NGO Education Programme Manager, Julie Juma, in a press statement issued yesterday said more could still be done in the education sector if governments increase the overall size of national budgets by increasing their domestic tax base.
She noted that progress has been made with the Global Partnership for Education (GPE) Financing Conference in Senegal in February where countries and donors pledged to increase funding. According to her, ActionAid believes much “For years many of these governments have been making progress towards the target of spending 20% of their national budgets on education – but 20% of a small pie is a small amount.
“If we are to mobilise the money that is urgently needed for education, countries must now focus on ways to expand their domestic tax base. “Some quick breakthroughs can be made to increase tax revenues by eliminating harmful tax incentives given to multinational corporations.
This alone could enable some countries to double their education budget,” adds Juma. She further said evidence collected by the body showed that, for many countries, governments are giving away vast sums in harmful tax incentives and even just a portion of these sums, if allocated to education, could ensure all girls and boys have access to quality public education. “Mozambique, Nepal and Tanzania are losing more than half a billion dollars a year to tax incentives. Tanzania, for example, loses 15 times more in tax incentives each year than it would to educate all girls currently out of school. “ActionAid research finds that governments in Sub-Saharan Africa may be losing around US$38.6 billion a year or 2.4% of their GDP to their own regime of corporate tax incentives – equivalent to nearly half their current education spending. “Many of these tax exemptions, such as tax holidays, are given to very wealthy foreign companies to encourage investment. However, many business surveys have found tax incentives effectiveness highly doubtful.
“Foreign companies are more attracted by other factors such as infrastructure and rule of law, which government needs to tax to create. ActionAid will present the findings of the report Making tax work for girls’ education: How and why governments can reduce tax incentives to invest more in girls’ education at PACE on 26 April. “It will set out the link between education and tax justice and recommending sustainable ways for African governments to dramatically increase financing for education by tackling tax policies that are too favourable to multi-national companies. “At the meeting, ActionAid will also launch publications making the case for linking tax justice and education finance in Malawi, Mozambique and Tanzania.
“The UN warned in 2016 that, unless developing countries increase their domestic tax intake to better finance public education, it will take them another fifty years to meet their commitments under the Sustainable Development Goals that promised all girls and boys should be able to complete free quality primary and secondary education by 2030. “Globally 263 million children are out of school. Of these, 61 million children are of primary school age and 5 million more girls that boys are currently receiving no primary education.

 

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