Symposium Posts

The start of 2020 brought with it very perilous times in which countries around the world were forced to close their borders in a concerted effort to contain the deadly COVID-19 which claimed over 7 million lives around the world in the first half of the year. Tax bases dwindled due to job losses and a correspondent decrease in income and sales taxes. As many governments scramble to come up with inventive policies to rebalance the economy and raise tax revenue, this is a call to revisit the relevance of existing tax expenditure policies as they may become redundant in a post-pandemic era.

As evidence shows that tax incentives are not key drivers of investment and the opportunity cost of the incentives are high with dire implications for the health sector in Africa, it becomes pertinent for African countries to re-evaluate and reform their tax incentives frameworks. To achieve this, African countries need to ensure that all tax incentives are only considered after conducting a cost-benefit analysis of the potential impact of the incentives.

Distribution-based approaches require a normative principle that integrates distributive justice considerations in a way that the predominant normative framework does not. If taxing rights are to be allocated based on distributional consequences, broader attention to the role of international tax in perpetuating or reducing international inequality is warranted.

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.

What do we owe our States, and what do our states owe us? This is a difficult question, sometimes answered by invoking a social contract between the rulers and the ruled which implicitly sets out the rights and responsibilities of each. Matters get even more complicated where international citizens and multinational corporations are concerned. Are they party to multiple social contracts? Or none? I will argue that if there is a social contract, then those involved in the international tax system—including tax evasion and facilitating novel forms of tax avoidance—are party to it.

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