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Festu says "SAD-Businesses in Somalia willfully evade tax with overt and covert support from public officials and offices"

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Friday June 24, 2016 - 21:58:46 in Latest News by Super Admin
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    Festu says "SAD-Businesses in Somalia willfully evade tax with overt and covert support from public officials and offices"

    2016 International Public Service Day Commemoration: Halt Illicit Financial Flows and effectively administer tax to advance efficient public service delivery in Somalia

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2016 International Public Service Day Commemoration: Halt Illicit Financial Flows and effectively administer tax to advance efficient public service delivery in Somalia

The Federation of Somali Trade Unions (FESTU) on the occasion of the commemoration of this year’s International Public Day wishes to state that one of the effective and genuine ways to tackle poverty, inequality, want and misery in Somalia is to consciously and consistently implement state-driven public services delivery programmes.

We therefore call on the Somali government to find ways and means to continuously and sustainably roll out public service provisions targeted at, and to reach the people and communities in need.

All developed economies of today were built and stabilized on a foundation deeply rooted in state-driven welfare programmes. Thus, for Somalia economies to do or be pressured to do otherwise is to mindlessly "kick-away the ladder” of development.

Sad still, till date, businesses in Somalia willfully evade tax with overt and covert support from public officials and offices. Thus, the country still cannot boast of effective tax collection mechanisms- laws and practices wise. Public sector workers have salary arrears for months. Workers are in public sector are not allowed to be unionized. When each Minister is appointed, he/she employes number of people when previously employed civil servants are without salaries and benefits.

We say these rampant and reckless tax evasion and fiscal corruption must stop. To do this will require that the country seriously and genuinely think of fashioning out just, progressive, durable and sustainable tax administrative mechanisms, for which we as organised labour will readily and tirelessly support. Budgetary support from International Community is unsustainable and reduces the legitimacy of State institutions in the eyes of the people.

Furthermore, FESTU notes that it is exactly 16 months when the African Union - Economic Commission for Africa (AU-ECA) report on Illicit Financial Flows (IFF) from Africa was adopted by the African Union Heads of State Summit in Addis Ababa. The report pointed out that a conservative figure of $50 Billion is lost to Africa annually through IFF activities. No doubt, these monies are lost revenues that otherwise would boost and complement finances necessary for achieving the roll-out of social services provisions.

FESTU equally notes with concerns that not much progress has been made with respect to the implementation of the recommendations contained in the adopted "Mbeki Panel Report” on IFF from Africa. Fortuitously, the recent Panama Papers leak further exposes the depth of the financial hemorrhages that Africa is exposed to as asset theft and tax evasion schemes and activities go unchecked.

We are therefore compelled to state some of the urgent and cardinal thrusts of the report’s recommendations, even as we take into considerations these financial tax avoidance revelations, to call on our governments to without further delay undertake the necessary implementation:

1. African countries should seek and pursue effective cooperation with themselves and other developing countries, particularly in terms of tax policy, practices and information sharing.

2. African governments should strive to eliminate undermining and damaging tax competition with and amongst them. In essence, tax concession in relation to attracting Foreign Direct Investment should be critically rethought.
3. Africa governments should seek cooperation with other developing countries to enforce multilateral adoption and implementation of measures to end financial and corporate secrecy jurisdictions which have contributed in major ways to the fledging of tax havens and thus loss of revenues to African governments. The revelations from the Panama Papers leak speak eloquently to this fact and the need to scale up preventive actions against secrecy tax jurisdictions.
4. On the strength of new revelations in terms of how Multinational Corporations have undermined revenue prospects of African countries, particularly in the extractive industry, Africa should commence processes to re-negotiate existing mining and exploration contracts as well as take other anti-mineral revenue theft measures.
5. African governments must commit to train and retrain personnel with the view to build, improve and deepen the skills, competences and knowledge needed for effective tax administration.
6. Importantly, tax regimes that place heavy burden and responsibilities on the working poor should be readjusted progressively, whilst sanctions should be improved to rein in the rich and corporate entities that have continued to evade tax payment.

Somalia must #StopTheBleeding and work to use tax revenues to finance social services delivery and not to continue allowing businesses to evade taxes and not provide public services to the detriment and exclusion of the poor and needy.

Somali government must allow public sector workers to enjoy their fundamental right of freedom of association, and allow unionization of public sector workers, without subjecting them under the watch of its officials who masquerading as union officials. The government must take full responsibility in giving public sector workers their salary arrears.

Omar Faruk Osman 
General Secretary 
Federation of Somali Trade Unions (FESTU)



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