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New commitments on financing for development are being negotiated in July in Addis Ababa at the Third Financing for Development Conference (FfD3). Tax and domestic resource mobilization have been placed in a central role in the negotiations. In order to increase domestic revenue, illicit financial flows and harmful tax practices have to be tackled.

In February 2015 President Kikwete adopted the African Union High Level Panel (HLP) report on Illicit Financial Flows from Africa. Among the various commitments are robust regulations, increased resources, capacity and transparency and curbing harmful tax incentives to foreign investors.The HLP report estimated that Sub-Saharan Africa loses more than 50 billion dollars annually (average of 2001-2012). This is more than the combined total of foreign direct investment (FDI) and net official development assistance (ODA), which these economies received in the same period.

The budget proposal for 2015/2016 does not take into account the revenue losses that are caused by various factors such as illicit capital flight as well as tax evasion and avoidance. For example Global Financial Integrity has estimated that Tanzania lost 2.5 billion euros in 2002-2011 only due to trade and transfer mispricing by multinational companies.

The 2015/16 budget is pegged at Tshs 22.48 trillion from Sh19.8 trillion for the year 2014/15: an increase of 15%. This move by the government is welcome and commendable. The biggest challenge with the endeavor, however, is whether the government will be able to collect these revenues adequately.

Recognizing this challenge and the adverse effects of these critical issues in Tanzania, we encourage the Government to support the following positions at the FfD3 conference in Addis Ababa:

- Support the establishment of an intergovernmental tax body that is tasked with addressing global tax policy, rather than the current Organization for Economic Cooperation and Development (OECD) led process that does not equally include all countries, including Tanzania. The decision about the tax body should be made during the High Level Meeting in Addis Ababa and not be postponed to a later moment, because otherwise countries are going into the Sustainable Development Goals Summit in New York in September without significant progress.

- End harmful tax incentives nationally, regionally and globally. Multinational companies are receiving too extensive tax exemptions and not paying their fair share of tax while citizens are bearing a disproportionate tax burden due to an over reliance on consumption taxes in revenue collection such as Value Added Tax (VAT) and Pay As You Earn (PAYE). Restrain from further developing Economic Free Zones.

- End harmful tax treaties that limit the ability of Tanzania to raise revenue to fund quality public service delivery. Tax treaties are intended to prevent multinational companies and individuals from paying tax twice in two countries, but instead exploitation of these treaties with poor terms for “source countries” are leading to Tanzania potentially losing revenues.

- Increase the transparencyof the international and national tax systems. In order to regulate, monitor and increase the accountability of tax systems, multinational companies should be obliged to disclose their financial accounts annually. Tanzania should also promote country by country reporting of all Multinational companies. Up to date information about national revenue income should be available to the public at relevant public authorities. Additionally, the government should establish public register of beneficial ownership of companies operating in the country.

- Increase the resources of revenue authorities to oversee and collect revenue from multinational companies.

- Review regressive tax policies, such as indirect taxes, to address inequalities.  Taxation reform should mobilize additional and sufficient resources to comply with States’ obligations to commit the maximum available resources to fulfilling human rights.

 

Presented by

PF Budget Working Group & Tanzania Tax Justice Coalition
 

On the 25th of June, 2015, Policy Forum participated in the public launch of the “Stop The Bleeding” Campaign in Nairobi aimed at curbing Illicit Financial Flows (IFFs) from Africa. The Campaign, driven by African civil society organisations with support from international non-governmental organisations (INGOs), aims at appraising the findings and recommendations of the Report of the High Level Panel on Illicit Financial Flows from Africa  for a strengthened Africa response and facilitating consultation among key African CSOs to strengthen independent efforts to curb IFFs at national, sub-regional and continental levels.

The launch began with CSOs convening on the 24th of June, 2015 at the Sarova Panafric Hotel in Nairobi where presentations on problematizing IFFs in the African context made. Participants heard about the implications for the Financing for Development (FfD), took stock of CSO engagement to-date including what was working and the gaps, and experiences in engaging key constituencies like gender groups and labour movements. The CSOs agreed on a call to action which comprises of the following:

Global/International community

- The international community should  cooperate in the recovery and repatriation of illicit financial flows out of Africa, as recommended in the Mbeki Report on Illicit Financial Flows

- The international community should support and make available resources necessary for the establishment and operation of a new intergovernmental body on international cooperation in tax matters.

African Union and Other Institutions

- African governments through the African Union must call for and push for the establishing of a new intergovernmental body on international cooperation in tax matters with responsibility for setting rules/norms.

- African governments through the African Union and its agencies should promote national and regional value chains to maximize their benefits from the current global trading and tax system

Sub-Regional

- African governments through the regional economic communities should collaborate  to set common standards and minimize the  effect of tax wars within the African continent

National Level

- African governments should implement the recommendations of the AU/UNECA High Level Panel Report on IFFs

- African governments should adopt  a full range of progressive taxation measures as a primary means of funding national development goals and reducing inequality

- African governments should  minimize tax expenditure by significantly reducing  tax incentives and exemptions

- African governments should  review  bilateral taxation treaties with developed countries to ensure that they are  getting their fair share of revenue

- African governments should assess and track the tax burden on poor men and women; and ensuring fiscal policies are gender sensitive

- African governments should  building domestic production capacity, ownership and service provision in trade infrastructure development

The launch event on the 25th of June involved a series of press junkets, general public assemble at Uhuru Park for entertainment and solidarity speeches followed by a public procession. The launch was organised by an Interim Working Group (IWG) of the African IFF Campaign Platform made up of six Pan-African organisations namely Tax Justice Network-Africa (TJN-A), Third World Network-Africa (TWN-Af), Africa Forum and Network on Debt and Development (AFRODAD), the African Women’s Development and Communication Network (FEMNET), the African Regional Organisation of the International Trade Union Confederation (ITUC-Africa) and Trust Africa supported and joined by the Global Alliance for Tax Justice (GATJ).

Following this campaign launch, a side event will be held on the margins of the upcoming 3rd Financing for Development Conference (FfD3) in July in Addis Ababa, Ethiopia. The purpose of the side event would be to introduce the Africa IFF campaign, re-emphasis the importance of taking forward the recommendations contained in the “Mbeki HLP report”, and highlight some of the joint plans that CSOs and other African institutions such as the African Union and UNECA have been undertaking to push for the implementation of the “Mbeki HLP report”. The side event will target African delegations, CSOs, African institutions and agencies present at the FfD3 conference. The side event will feature a panel session comprised of representatives from the African Union Commission, Africa Group delegation, UNECA and civil society.

On June 16th, 2015, the Government of Tanzania tabled in parliament three bills related to extractive industries under Certificates of Urgency. The bills are The Tanzania Extractive Industries (Transparency and Accountability) Act 2015, The Oil and Gas Revenue Management Act 2015 and The Petroleum Act 2015. 
 
To this effect, we the undersigned Civil Society Organizations convened and deliberated on the bills in Dares Salaam from the 21st to 23rd of June, 2015 aiming at providing inputs for improvement of the proposed legislations with national interests at the fore.
 
We highly COMMEND the government for its efforts and determination to manage this national wealth effectively and strategically for the benefit of the current and future generations of this country. We UNDERSCORE the fact that, in the overall, the three bills have many positive aspects to safeguard national interests in tandem with encouraging investments in the sector, as well as ensuring transparency and maintaining macro-economic stability.
 
Despite this, we are CONCERNED about the rushed process to pass these important pieces of legislation and with apprehension, we note that this is becoming the norm as in 2010 with the Mining Act, similar haste was observed. More important, nevertheless, it is critical that the government gets the legislations right.
 
We APPEAL to members of Parliament to diligently scrutinize the bills even though there is much attention being afforded to the general election and other priorities are being overridden. 
 
1.1 Draft Petroleum Act, 2015
While the bill sets up a sophisticated institutional structure for managing the petroleum sector, designed potentially to promote checks and balances and specialization among the different functions necessary in order to manage the sector effectively, there are several sections that risk creating administrative overlap, confusion, or distorting the incentives of these public institutions to optimally manage the sector. 
 
Most importantly, the unclear use of the word “exclusive” in relation to National Oil Company’s powers in Sections 10(2) and 45 creates a risk of conflicting interpretations and accountability challenges. While such a system can confer certain advantages in terms of empowering the NOC to learn the business and chart its own partnership strategies, it also carries the risk that the selection of partners will be driven more by the NOC’s commercial interest than the overall national interest. This is inconsistent with the spirit of the National Gas Policy and the 2014 draft Petroleum Policy.
 
Section 6: “The Commissioner for Petroleum Affairs shall be the advisor of the Minister on policy, plans and regulations as well as the day to day administrative matters in the oil and gas subsector.”
 
Concern: creating the position of petroleum commissioner who will be at the same level as the commissioner for Energy could possibly create functions overlap and conflict, but also technically petroleum falls under Energy sector.
 Recommend: To create Deputy Commissioners with specific functions on Petroleum and/or Energy since It may be appropriate to retain and strengthen office of the Commissioner for Energy to avoid overlap
Section 45: “The National Oil Company shall have exclusive right over all petroleum rights granted under this Part.” 
Concern: These two sections are conflicting  S.45 (40 specifies the NOC share and S. 219 (1) which gives the government discretion to decide the share also this section raises accountability challenges as well as creating institutional monopoly.
 
Recommend: The exclusive rights for NOC should be subjected to parliamentary scrutiny
 
Section 101 (3): “The license holder and contractor shall not flare or vent petroleum without prior consent from PURA.”
 
Concern; the law makes PURA the final decision maker without concerting environmental management agencies.
 
Recommend:  The Minister to issue permission to flare upon written advice from PURA and NEMC
 
Furthermore, it is critically important that the bill makes provisions that require publication of key information to enhance transparency of the petroleum sector. These may include but not limited to: bidding documents- pre-qualification criteria, a list of pre-qualified companies, bid criteria, list of bidders, the winning bid, a bid evaluation report justifying the winning bid based on the criteria. Full text contracts, along with their amendments and annexes, and beneficial ownership of license holders, Environmental impact assessments, environmental management plans and annual reports and local content plans and reports.
 
1.2 Oil and Gas Revenue Management Act 2015
The proposed legislation contains very important provisions to ensure prudent management of revenues accruing from oil and gas extraction; maintain fiscal and macroeconomic stability and aligning strategic investment with medium to long term development priorities, hence, sustainable development. However, the proposed fiscal rules do not guarantee intergenerational equity in terms of saving a proportion of the revenues for future generation as provided in the Natural Gas Policy 2013. 
 
Limiting the funding for strategic development expenditure to 60% of funds transferred to consolidated account may undermine requirements for such investments when the absorption capacity warrants spending 100% or more of the transfer to consolidated account from the Fund. Further, the proposed law lacks clarity on the maintenance of fiscal deficit (Section 17. (1)(b). For more clarity, the provision ought to be improved to ensure that maintenance of fiscal deficit takes into consideration the timing of revenue flow (excluding designated oil and gas revenues) from such a time when revenues attain a level of atleast the set cap of 3% of GDP when revenues fall permanently bellow the cap.
 
While the proposed law intends to ensure availability of funds for investment by the National Oil Company (NOC), tying funds of the NOC to 0.1% of GDP  does not necessarily guarantee a share of revenues that is appropriate given its objectives and or its capacity to spend. To avoid potential challenge of either underfunding or overfunding of NOC, the government may consider funding through Consolidated Account based on the NOC’s medium to long term investment plan. 
 
1.3 Tanzania Extractive Industries (Transparency and Accountability) Act 2015
We believe that the proposed law will strengthen Tanzania’s commitments to revenue transparency started by joining EITI global movement in 2009.We note that since then TEITI Multi stakeholder Group (Operations) has been done through a Memorandum of Understanding, without any legislation. The proposed law will provide legal basis for the enforcement of commitments as underpinned by the EITI standards and in line with government commitments to openness and accountability in oil, gas and mining sectors.
 
However we need to raise some obvious weaknesses in this proposed law including making the committee a government entity thereby lacking independence. We call upon the government to ensure that the governing body (TEITI MSG) retains its autonomy and independence in electing its own members, raising its own material and human  resources as well as ensure protection from political interference. 
 
Furthermore the minimum penalties suggested for not disclosing the information as required does not reflect the value of the extractive sector and needs to be reversed. 
 
Signed:
(1) Policy Forum
(2) Oil, Natural Gas & Environmental Alliance (ONGEA)
(3) HakiMadini
(4) Interfaith Standing Committee on Economic Justice 
(5) Governance and Economic Policy Center
(6) International Alliance of Natural Resources in Africa (IANRA)
(7) Governance Links
 
 
 

An Interim Working Group (IWG) of the African IFF Campaign Platform made up of six Pan-African organisations namely Tax Justice Network-Africa (TJN-A), Third World Network-Africa (TWN-Af), Africa Forum and Network on Debt and Development (AFRODAD), the African Women’s Development and Communication Network (FEMNET), the African Regional Organisation of the International Trade Union Confederation (ITUC-Africa) and Trust Africa supported and joined by the Global Alliance for Tax Justice (GATJ) will launch a unified African Campaign platform on IFFs. The launch will be held on the 25th June 2015 in Nairobi, Kenya.

The main goal of the campaign is to stop IFFs from Africa. The aim of the launch is to implement one Africa Campaign on IFFs that is led and driven by African civil society organisations with support from other partners including international non-governmental organisations (INGOs).

As a follow up to the public launch of the Campaign in June, a side event will be held on the margins of the upcoming 3rd Financing for Development Conference (FfD3) in July in Addis Ababa, Ethiopia. The purpose of the side event would be to introduce the Africa IFF campaign, re-emphasis the importance of taking forward the recommendations contained in the “Mbeki HLP report”, and highlight some of the joint plans that CSOs and other African institutions such as the African Union and UNECA have been undertaking to push for the implementation of the “Mbeki HLP report”. The side event will target African delegations, CSOs, African institutions and agencies present at the
FfD3 conference. The side event will feature a panel session comprised of representatives from the African Union Commission, Africa Group delegation, UNECA and civil society.

For more information on how you can be involved in the period leading up to the 25th June campaign activities and beyond please contact Savior Mwambwa mwambwa@taxjusticeafrica.net

An Bill to provide for regulation of upstream, midstream and downstream petroleum activities, establishment of the Petroleum Upstream Regulatory Authority, to provide for the National Oil Company, to secure the accountability of petroleum entities and to provide for other related matters.

Read the bill by clicking the attachment below.

This Bill intends to introduce the Tanzania Extractive Industries, Transparency and Accountability Act, for the purpose of establishing  the Extractive Industries, Transparency and Accountability Committee whose prime duty is to ensure that there is transparency and accountability in extractive industry. In securing transparency and accountability of extractive industries, this Bill responds to challenges faced by the Government in managing extractive industries including low contribution of the industry to the National Growth Domestic Product (GDP) as compared to the sector growth, inadequate capacity of the Government institutions in administering the sectors, lack of transparency in disclosing information relating to the investment of extractive industries and revenues accrued from natural resources extraction.

Read the bill by clicking the attachment below:

Bill presented to parliament for first reading on 16th of June, 2015. The Oil and Gas Revenues Management Act, 2015 is an Act to provide for the establishment and management of the Oil and Gas Fund, to provide for the framework for fiscal rules and management of oil and gas revenues and to provide for other related matters.

Read the bill by clicking the attachment below

 

Photo Credits:United Nations Democracy Fund (UNDEF)

“With more women in the boardroom, greater legislative rights, and an increased mass of women’s visibility as impressive role models in every aspect of life……. one could think that women have gained true equality” (2000 and beyond) theme for the International Women’s Day, 2015.

But to what extent does that quotation reflect our experience of the reality within our own society?

In Tanzania, gender participation in socio-economic, political and cultural spheres began to gain momentum in the 1990s when the government reaffirmed its commitment to the Convention on the Elimination of all forms of Discrimination Against Women (CEDAW) and the Beijing Platform for Action, following the Beijing conference, which upholds:

-          women’s legal capacity;

-          economic empowerment of women and poverty eradication;

-          women’s political empowerment in decision-making, and

-          enhancement of women’s access to education, training and employment .  

On political empowerment, Tanzania Constitution in Articles 66 (1, b) and 78 (1), states that women members must not make up less than 30% of the National Assembly. The special seats for women are distributed among the political parties in proportion to the number of seats awarded to them in parliament.

The introduction of a quota system in Tanzania in 1985 and the adoption of Affirmative Action has indeed increased women political participation. Despite the fact that this system has helped address the issue of gender imbalance in terms of number, it has nevertheless been unsuccessful so far in building the capacity of the majority of women to progress further – and to aspire to the presidential post in Tanzania.

Although there has been an improvement over the last couple of years towards achieving gender parity in Tanzania, the challenge remains that there are still large ‘gender gaps’ which need to be addressed.

Women are now seen in politics more than ever before but still there is an air within parties which shows election campaigns being dominated by men.  Currently we are hearing of more than 30 politicians announcing their presidential bid but there are only three female candidates amongst all those who announced.

Despite the efforts of Tanzania Private Sector Foundation (TPSF) which launched a special fund in 2014 to empower women to stand as candidates during the general election, there are still challenges facing women.  These include election funding, cultural aspects, patriarchal systems and gender roles within our society, to mention just four.  These and others are amongst the factors which hinder the participation of many women in the election process.

There are several initiatives which might be introduced to support women in the political arena.  It is important to make the system accessible to women who are capable of competing for the highest position, yet there is a basic problem that women cannot join men in election campaigns because they simply don’t have resources to do so.  Also, it is important to find ways of breaking down cultural barriers which have become embedded within patriarchal systems: when it is easier to cross such barriers, more women will be enabled to join the race.  Positive messages will help to break down preconceptions: it has been built into the minds of so many of us that the “Presidential Post” is a post to which only men can aspire.  We must not forget that our constitution provides this right to any Tanzanian who meets the requirements regardless of their sex.  

Surely the time is now to call for positive support to enable more women to take part in the 2015 general election. This, in turn, will encourage more women to set their sights on 2020. Therefore let’s make a start.  Let’s make a difference.  Let’s think globally and act locally by ensuring that women too are encouraged and supported in the 2015 Presidential race.

To confidently claim that the government is using the maximum of its available resources, the allocations have to be sufficient to address the available challenges. Looking and the Tanzania education budget for financial year 2015/16, the government still has not met the universal agreed standard of investment to the sector as the 17% allocation still falls short of the 20% of the National budget as stipulated in the Dakar EFA agreement and UNESCO’s  Global Education Forum. 

This was said by Mwemezi Makumba, Programme Officer at Hakielimu during the Policy Forum breakfast debate held on the 29th of June 2015 at the British Council Auditorium titled “The National Budget 2015/16:  Is government using the maximum of its available resources towards health and education?

It was revealed that from the proposed National budget for FY 2015/16 which has a total allocation of Tsh. 22,446 billion, an increase of around 2,593 billion (11.5%) from Tsh. 19,853 billion allocated in the previous year, the government proposes to spend Tshs. 3,887 billion (3.89 trillion) towards the education sector. Again this is an increase of 422 Million (10.8%) from Tsh. 3,465 billion allocated in 2014/15.

Makumba said that although the government continues to give priority to the education sector above other sectors in terms of allocation by apportioning 3,887 billion of the total proposed 22,446 billion national budget (17%), in actual expenditures this was not the case.

He further argued that there was a huge mismatch between recurrent versus development budget execution with the latter falling short because of late or no disbursements in some cases. He stressed that it is difficult to confidently claim that we are using the maximum of our available resources to education when development budget allocation is underspent while recurrent spending on salaries, goods and services is utilized to a great extent. This means that a bulk of funds are being spent on consumptions that rarely extend beyond a fiscal year rather than the acquisition of assets that lay the groundwork for sustainability and growth in education, a sector that has seen neglect in many years.

Mwemezi also said that the education budget is implemented by too many Ministries, increasing the administrative costs and rising recurrent expenditures at the cost of development spending.

Mr. Robert Kasenene, the second presenter at the breakfast debate and arepresentative from United Nations Association of Tanzania (UNA-Tanzania), presented on “Budgeting for contraceptives in Tanzania: Will Investing in Family Planning accelerate economic growth?” and emphasized the importance of streamlining budgeting for Family Planning. He revealed that although this was relatively new in the Tanzania budget where the budget line for it was introduced in 2010, the annual financing needs are now estimated at Tsh. 20 billion for services and supplies whilst the spending from Government sources was still at Tsh. 2.5 billion pointing to a gap that needed to be filled soon as the need for FP services and contraceptives is growing at rate of between 2 to 3.5%.

Illustrating this urgent need, he revealed that Tanzania has a growing population where over 60% are below 35 years of age, 10 – 24 year-olds make up to 35% of the population, women of reproductive age reach 12 million (not segregated) and the birthrate is at 5.29 per 1000 (WB, 2012) which is high.

Kasenene said that in light of such high birth rates, poverty and more dependents, healthcare costs were compounding abilities for women to adequately contribute to economic activity and output. This he therefore stressed required available and adequate Family Planning services and commodities giving users an opportunity to choose and have time to be productive in generating income.

Commenting on the presentations, the discussant Dr. Rufaro R. Chatora, theWorld Health Organization (WHO) Representative was more concerned as to why the national budget is seen to increase while the intended results are not met.

He recommended that the government look into raising sufficient resources to fund social sectors.

On the 18-24 May 2015, Policy Forum – Local Government Working Group (LGWG) was invited to participate in the “World Village Festival” and other subsequent events organized by Kepa in Helsinki, Finland. The event brought in different NGOs from Europe, the Middle East and Africa to discuss the opportunities and challenges related to development that developing countries are facing but more specifically how decisions made in the north affect the lives of people in poorer countries.   

Participating in the discussion entitled “Artisanal Miners: what are the challenges at local level” Alex Modest Ruchyahinduru, Manager of Communication and Advocacy pointed out that Tanzania just like any country in Africa with mineral resources, artisanal miners do face several challenges including evacuation of their mining places adding that this has been due to lack of license security compared to big investors with big mining license who are given first priority.

He said, due to small capital and lack of collateral, artisanal miners in Tanzaniaare unable to secure loans from banks and other financial institutions for their starting capital and more worse for female miners and for miners who operate without licenses. This also affected them in accessing marketing information in related to their products e.g the prices of Gold they sell it for, in comparison to the real value. Apart from obtaining finances, he added that artisanal miners also face some other challenges like transport, tax regime, job security and child labour.

He also said that lack of skills of artisanal miners on the mining sectors has also been a challenge. Most miners lack the technical know-how to improve their capacity and productivity and hence earn very little raw materials. “Most activities to support mining sectors have leaned on the large scale mining operations”

He added that the inclusion of artisanal miners in Government Policy and development planning and from social and environment policies such as health care and natural resource management is fundamental and hence the government and CSOs need to work together to bring change and attitudes on the ground.

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