Consultant – Economic Governance II- Governance of Africa’s tax expenditures for enhanced domestic resource mobilisation
Addis Ababa (Ethiopia)
Result of Service
The overall objective of this consultancy is to study the in-country situation of tax expenditures, identifying, classifying and quantifying foregone revenues (costs) resulting from different tax incentives. Further, where possible, the study will aim at establishing the impact of tax expenditures on country’s domestic resource mobilization to finance sustainable development and how effective they are in meeting the objectives they are granted for, what the issues are, and what can be done to support the country not to lose scarce resources potentially available for financing sustainable development and accelerate towards meeting the SDGs and agenda 2063 aspirations.
The study will entail desk review and meetings with key Informants( including relevant government institutions, policy makers and private sector- investors) to analyse the prevalence of tax expenditures, estimate their costs and where possible, their effectiveness in achieving intended purposes of fostering sustainable economic growth. To this end, ECA is seeking to recruit a country consultant to undertake the country-case study that will contribute to the overall report on “governance of Africa’s tax expenditures for enhanced domestic resource mobilization”.
The scope of the study will include the following:
• Review of the in-country fiscal and other relevant laws to identify and classify key tax expenditures, including by sectoral distribution. This will include mapping tax provisions under the specific categories of corporate income tax (CIT) and value added tax (VAT) which have the highest potential for sources of tax expenditures.
• Apply the revenue-forgone approach for estimating tax expenditures. This approach quantifies the direct revenue loss associated with a tax law provision under consideration, relative to the benchmark system. Data available on revenue forgone due to tax incentives will mainly be sourced from the country tax administrations’ databases. Revenue forgone will be estimated directly from data provided, and indirectly on the basis of other data sets, such as information provided in taxpayers’ financial statements and tax returns.
• Where possible, asses’ direct costs of Tax Expenditures against indicative economic benefits being pursued in offering respective tax incentives.
The consultant is recruited for one month starting from the date of signing the contract,Duties and Responsibilities
ECA’s policy research in the area of Economic Governance and Public is designed to assist member States in improving economic governance and development management including strengthening the rule of law, state legitimacy, trust in governance institutions and reducing corruption and boosting domestic resource mobilization. It is also geared towards strengthening public sector management systems, including management of public finances and improving overall governance institutions, accountability and public sector operations.
As Africa steps up Domestic Resource Mobilization efforts, the imperative to ensure the efficiency and effectiveness with which the resources mobilized are used to achieve set objectives is maximized has never been more urgent, to meet the SDGs and Agenda 2063 aspirations, but most immediately the responses to the COVID-19 pandemic.
The United Nations’ third international conference on financing for development emphasized the key importance of domestic revenue mobilization (DRM) for the new sustainable development goals (SDGs), particularly in developing countries (DCs). The conference outcome document (United Nations, 2015) affirms members’ commitment to work toward improving the “fairness, transparency, efficiency, and effectiveness” of tax systems, and strengthening international cooperation to help DCs mobilize domestic revenues. Accordingly, tax expenditures which are commonly defined as the amount of tax revenue foregone through the application of special tax provisions or regimes, relative to a benchmark tax system, has been placed at the centre of the policy debate on revenue mobilization for the following reasons:
1) Good policy practice on broadening the tax base requires an analysis of the structure of tax bases and estimating the cost of tax expenditures is one important element of such analysis.
2) Tax rates in DCs, particularly in Sub-Saharan Africa, remain relatively high compared with rates in high-income and transition economies, while tax bases tend to be narrower. Therefore, revenue mobilization through increases in tax rates, while possible in certain areas of the tax system, is likely to have adverse efficiency implications and may worsen tax inequities.
3) Successful tax reform often depends on communicating simply and effectively, the implications of policy choices to the public. However, most governments frequently look much more carefully at outlay than at tax expenditures. As a result, less attention is devoted to analysing, controlling and reporting tax expenditures, with little or no information collected on the cost and benefits of special tax provisions. Therefore, a study on the governance of Tax Expenditures can play a useful role in this exercise.
Although governments generally rely on direct spending to finance their policies, tax expenditures are a common channel for financing government policies outside the budgetary framework. The concept of tax expenditures has become increasingly important because the pressure to provide tax incentives or tax holidays to attract investment shrinks the tax base of many countries which ultimately suffer threats from a number of sources, particularly through Base Erosion and Profit Shifting (BEPS) associated with multinational enterprises. In Africa especially, new tax expenditure provisions are introduced regularly without adequate scrutiny and central coordination, despite their magnitude and the fact that their net impact on government budgets could be the same as direct spending. Moreover, transparency on existing tax expenditures is limited and its impact not easily discernible. As a result, tax expenditures are hardly ever subjected to sound analyses and debate. This lack of attention and evaluation is particularly alarming as tax expenditures are not only often ineffective in reaching their stated objectives, but also frequently trigger negative socio-economic side effects. It is against this background that the study aims at enhancing DRM through fair, transparent, effective and efficient governance of Tax Expenditures.
The second edition of the Economic Governance Report is devoted to support African countries to assess and better manage their revenue potential, for the benefit of all citizens, evaluate, and report foregone revenues as part of tax expenditure reports (which are linked to national budget processes) and to address the potential downsides of tax expenditures.
The study will be based on a combination of methods, embracing both desk review of existing literature and the use of empirical data gathered through country case studies from a carefully selected number of African countries with sub-regional representation. The research will combine country-level case studies with the analysis of cross-cutting data across the continent. It will draw from ECA’s own theoretical and empirical work in the area, as well as the work of analyses from other institutions, providing an analytical framework and guidelines, including detailed data requirements. Case study countries will be selected according to relevant experience with tax expenditures, the imperatives of regional balance, diversity of experiences as well as prospects of being able to collect relevant data and information.
The consultants will work from home and under the overall oversight of the Director of Macroeconomics and Governance Division and the direct supervision of the Officer-in-Charge, Economic Governance and Public Finance Section, Macroeconomic and Governance Division and the lead consultant.
The consultants will have the following duties and responsibilities:
Duties and responsibilities
. Describe the general tax regime and benchmark tax system in the country and compile an inventory of tax incentives that constitute taxThe consultant will work from home and under the overall oversight of the Director of Macroeconomics and Governance Division and the direct supervision of the Officer-in-Charge, Economic Governance and Public Finance Section, Macroeconomic and Governance Division.
The consultant will have the following duties and responsibilities: expenditures.
2. Develop a comprehensive repository of all tax expenditures under different tax categories, mainly CIT and VAT
3. Estimation of the revenue foregone as a result of the tax incentives that deviate from the benchmark tax system of the country,
4. Where possible, assess direct costs of tax expenditures against the economic benefits from the objectives being pursued (from a qualitative point of view).
The study will cover 16 countries below. We will need to recruit one national consultant in each country
11. South Africa,
12. Burkina Faso,
13. Cote d’Ivoire,
Therefore this advertisement is for 16 consultants each one consultant in the above 16 African countries.
Academic Qualifications: Advanced university degree (Master's degree or equivalent) in economics, law, and public administration or other relevant field is required. A first-level university degree (BA) in combination with professional studies in taxation and additional two years of qualified experience will be acceptable in lieu of the advanced university degree.
Experience: A minimum of five (5) years of relevant professional experience is required; experience in the analysis of economic governance and public finance issues, particularly taxation and tax systems, is required.
Language: English and French are the working languages of the United Nations Secretariat. For the position advertised, fluency in English is required and knowledge of the other is an advantage.
THE UNITED NATIONS DOES NOT CHARGE A FEE AT ANY STAGE OF THE RECRUITMENT PROCESS (APPLICATION, INTERVIEW MEETING, PROCESSING, OR TRAINING). THE UNITED NATIONS DOES NOT CONCERN ITSELF WITH INFORMATION ON APPLICANTS’ BANK ACCOUNTS.