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Ghana is hosting a five-day international conference which seeks to stimulate debate on the importance of fair taxation in developing countries. Mr Stephen Hale, Deputy Campaign Director of OXFAM International, Switzerland, in an address said the programme was a critical opportunity to facilitate the exchange of knowledge and expertise on taxation among various actors in developing countries. According to him, while taxation was the most sustainable source of financing development, ending aid dependency as well as over reliance on foreign direct investments and loans, there was still a substantial lack of capacity and insight of civil society into the technical-fiscal domain of a country�s tax system. He said the conference which was organised by OXFAM Ghana, in collaboration with the International Tax Compact and Tax Justice Network-Africa all Non-governmental Organisations, would therefore make recommendations on the need to engage developing countries and Civil Society Organisations (CSOs) in the on-going effort to reform the international tax systems. Representatives from international organisations, CSOs and government representatives from about 15 African and Asian countries are participating. Mr Hale maintained that to achieve greater accountability civil society must be well positioned through avenues such as public forums for discussions, to promote fair and pro-poor tax systems, reinforce public scrutiny of tax governance, and promote a national dialogue on the desirability of more progressive taxation. He indicated that tax was expected to offer an avenue for more equitable distribution of wealth and services, because it has a redistributive function which could reduce inequality, when it was designed in an appropriate way, especially through progressive taxation of income and wealth. Yet tax revenues in developing countries fall short of what realistically could be obtained when analyzing their actual potential and capacity, both in terms of efficiency and progressiveness. Broadly, he said, tax policies in developing countries were raised towards collecting taxes easily, including consumption and wage taxes which impose a higher tax burden on poorer households and formal sector employees. According to him, on the average, 18 Per cent of Gross Domestic Product (GDP) comes from tax revenues in African countries, compared to an average of 38 per cent in Western European countries. Mr Hale said many developing countries continue to face challenges in their efforts to mobilize domestic resources due to a combination of several factors such as weak tax administrations, regressive tax regimes, wide range of corporate tax incentives, as well as insufficient use of capital taxes. More importantly weak international tax system leads to profit shifting and transfer mispricing by multinational companies which erode the tax base even further, he said. He said a study by the Global Financial Integrity, revealed that African countries lose up to 50 billion dollars per year, as a result of these activities. Although the world had created so much wealth which could resolve educational and health related issues, such resources were concentrated in the hands of the top one per cent rich people, he said. �A recent OXFAM paper has revealed that the top 85 people in the world control as much as the earnings of 1.5 billion people,� he said. Mr Hale further explained that OXFAM�s recent research revealed that improving taxation could potentially raise 269 billion dollars annually, which could be sufficient to cover 60 per cent of the financing requirements for achieving the Millennium Development Goals. According to him, the willingness to pay taxes was very dependent on returns on investment for citizens and also crucial for building the democratic legitimacy of states. He stated that civil participation in taxation does not only contribute to state-building which was important for sustainable, but also strengthens state capacity, central in sustaining state legitimacy. Dr Edward Larbi Siaw, a Tax Policy Advisor to Ghana�s Ministry of Finance and Economic Planning, in his submission said the country cannot continue to increase tax rates for those in the tax net and leave out others because it was not fair, adding that for equity everyone must pay in order to increase the tax and GDP rates to between 20 and 25 per cent of the country�s GDP. He agreed to the fact that fair taxation was the most sustainable way of financing development and enduring aid dependency. He, however, explained that the Ghana�s current Macro-economic target for the Medium Term aims at a Budget Deficit of six per cent by 2016 and the target for 2014 was 8.5 per cent, indicating that national tax policies and revenue performances had direct impact on the overall budget deficit. He linked global policies such as Base Erosion and Profit Shifting to national tax policies such as highlighting the innovative tax policies which have been introduces in Ghana recently and includes the petroleum Excise and Road Fund Levy to be consistent with the current excise tax regime. Dr Siaw said other decisions such as the removal of tax exemptions were aimed at reducing the overall impact of tax exemptions and monitor tax incentives legitimately given, to avoid abuses and diversion into the local market. He explained that Ghana could no longer borrow under concessional rates and for long periods due to its present rating as a lower middle income economy, which had also led to a reduction in the availability of Grants and Aids. �We have to go to the World Bond Market and borrow at high rates. We cannot continue to deal with a population of 25 million and collect taxes from only two million out of the six million eligible tax payers�, he said. He said the Ministry would welcome suggestions, workable strategies and recommendations proposed by the conference to help improve the tax system in Ghana.