Taxation

Our ethical conundrum as we think about issues of global distributive justice in the post-pandemic era is that social contract theory fails to provide an adequate framework for conceptualizing duties and obligations of international organizations to individuals, as opposed simply to their member states. The tension comes from the fact that people intuitively have a sense of justice which is offended by the manner in which power is wielded by those at the helm of the global financial order to place the interests of international organizations, banks, and multinational corporations over and above those of individual human beings, particularly those at the margins of the world economy.

The most relevant advantage of the Post-COVID Compulsory Loan would be the opportunity to amend the current Social Contract. The imposition of such a measure should be preceded by dialogue and negotiations to determine what sectors would contribute or benefits, earmarks, and public policies and measures.  Moreover, that may be a chance to increase trust and solidarity among stakeholders.

This paper examines the intra-national dimensions of the fiscal social contract, with a focus on the experience in developing societies.  Helpfully, some more advanced societies have demonstrated a semblance of a positive relationship between taxation and the social contract, beyond the realm of mere potential or aspiration. Drawing guidance from such advanced societies, this paper also discusses what social, legal, and political pillars must be in place in society to support the framework of taxation from a social contractarian perspective.

The financial crisis of 2007-9 and the ensuing austerity put the political spotlight on the increasingly evident defects of the international framework for taxation of transnational corporations (TNCs). This attention will be heightened by the current COVID-19 crisis, which has led to even greater levels of state expenditure, including bailouts to business, and will bring an even sharper focus on taxation.

There is no room for experts from affluent countries to swoop in and tell less affluent countries what they ought to do to reform their tax systems. Instead, experts from wealthy countries need to take tax policy spillovers seriously and correct the systemic flaws in the international tax regime that make it hard for some countries to tax effectively. This is, in my view, crucial to forming an acceptable international social contract going forward.

How States proceed with building consensus to create a social contract that facilitates effective taxation, especially in the light of the massive disruptions caused by the pandemic will require continuous engagement by all parties. Success will perhaps depend on how proactively and quickly countries and the international taxation system unlearn old habits and begin to ascribe to the new normal way of doing things.

This symposium addresses issues such as the low tax to GDP ratio in developing states, the broken social contract in these countries and the reforms needed to repair the social contract. The convener, in accepting the invitation of Afronomicslaw to host the tax symposium, called upon tax practitioners, academics, policy experts, philosophers, administrators, to offer insights on the relationship between taxation and the social contract

In this blog, I continue discussing the broad understanding of informality while briefly touching on informal enterprise. And I hope to, simultaneously, point out a couple of proposed solutions to challenges of the informal economy in Africa. My very strong suggestion, though, is that African countries should embrace informality as a reality on the continent.

Despite the existing EAC legislation, citizens continue to face challenges to movement of goods and persons across the borders. The ability of EAC citizens to enforce these trade commitments has been grossly underused, and such disputes have been referred to diplomatic means for resolution. It can only be hoped that moving forward, more persons will seek legal redress for such disputes.