First ATI Regional Workshop on Tax Expenditures (West Africa)

The First ATI Regional Workshop on Tax Expenditures was held in Nigeria (Lagos, 27-28 July, 2022), co-organised by the Addis Tax Initiative (ATI), the Council on Economic Policies (CEP) and the German Institute of Development and Sustainability (IDOS), in collaboration with the West African Tax Administration Forum (WATAF), the Economic Community of West African States (ECOWAS Commission), and the African Tax Administration Forum (ATAF).

A second regional workshop covering East Africa was organised in Kenya (Nairobi, 18-19 October, 2022), followed by another regional workshop with a focus on Asia held in the Philippines (Manila, 1-3 March 2023).

The workshop report is downloadable on the ATI website, available in English and French.

  • With around 70 participants from 18 countries attending, the Workshop showed great engagement from different stakeholders in the region and other invited countries. Here are some highlights and key learnings from the enriching discussions during the meeting in Lagos:

    • Whereas there is not yet a codified body of knowledge on TE governance, it is possible to identify certain principles, including that the set-up of tax expenditures involve both the Ministry of Finance (MoF) and Parliament.
    • Defining a benchmark tax system is not always straightforward and there is no general blueprint. Governments need to address technical and methodological challenges, but often there is also a political dimension to the question whether a specific provision should be considered a TE or part of the benchmark system.
    • Almost all governments use the so-called “revenue forgone” approach to assess the costs of specific TEs. Yet, due to data and modelling limitations uncertainty might be considerable.
    • According to the Global Tax Expenditures Database (GTED), more and more governments have started to publish data on tax expenditures. Yet, several challenges still prevail, going from lack of human as well as technical resources (e.g. electronic tax returns) to insufficient coordination across institutions and a lack of political will.
    • The use of tax expenditures varies considerably across countries, but significant tax incentives are granted to the extractive sector in the region – often without knowing whether they are value for money.
    • Ex-ante as well as ex-post evaluation frameworks are strikingly rare and, yet crucial to identify which provisions are cost-effective and which ones need to be reformed. The quantity and quality of data are key to ensure that tax expenditures are comprehensively assessed.
    • Tax expenditure reforms should aim at strengthening by improving the effectiveness of tax systems, and ensuring that tax expenditures are better aligned with governments’ policy goals. Yet, reforming tax expenditures is challenging due to the vested interests often associated with individual mechanisms.

  • Tax expenditures have a profound impact on countries’ ability to mobilise domestic revenue, fight climate change, recover from the COVID-19 pandemic and, ultimately, attain the Sustainable Development Goals (SDGs). If not monitored closely and assessed consistently, tax expenditures may jeopardise the transparency of national budgets and policies. As stipulated under Commitment 3 of the ATI Declaration 2025, members have committed to “improve tax transparency by publishing tax expenditures regularly to facilitate cost-benefit assessments, ultimately helping to reduce wasteful tax expenditures, improving taxpayers’ trust, and creating a more level playing field for all types of businesses. We will improve inter-agency cooperation on tax expenditures and foster the coordination of granting tax concession activities.”

    To that effect, the ATI, in collaboration with the West African Tax Administration Forum (WATAF), the Economic Community of West African States (ECOWAS Commission), the African Tax Administration Forum (ATAF), the Council on Economic Policies (CEP) and German Institute of Development and Sustainability (IDOS), is organising a regional workshop on tax expenditures with a focus on West Africa. The event will take place on 27 and 28 July 2022 in Lagos, Nigeria.

    The workshop builds on the ATI Commitment 3 and the Global Tax Expenditures Database (GTED), which was launched by CEP and IDOS in June 2021. With its worldwide coverage, the GTED helps to increase transparency on tax expenditures and sheds light on their critical role in tax systems around the globe. As shown by the GTED, the number of countries reporting on tax expenditures has been growing steadily over the years. However, the scope and quality of reports still vary significantly. Only few countries in the world have started to systematically evaluate the tax expenditures they use in order to find out whether or not the benefits obtained match the fiscal costs incurred.

    The workshop in Lagos, Nigeria, is the first in a series of regional workshops organised by ATI, CEP and IDOS. On this occasion, WATAF, ATAF and the ECOWAS Commission will be joining as local partners. The event provides a unique opportunity to ATI member countries and other interested governments to exchange with regional partners and international experts on the estimation, reporting and evaluation of tax expenditures.

  • Wednesday, 27 July 2022
    Governance, Estimation and Reporting of Tax Expenditures
    09.00-10.00Welcome Address & Introduction
    10.00-11.20Session 1: A Governance Framework for Estimating, Reporting & Evaluating Tax Expenditures
    11.20-11.45Coffee Break
    11.45-13.15Session 2 – Establishing a Benchmark
    13.15-14.15Lunch Break
    14.15-15.45Session 3 – Estimating Revenue Forgone
    15.45-16.10Coffee Break
    16.10-17.30Session 4 – Reporting on Tax Expenditures
    17.30-18.45Special Topical Session – Regional Approaches and Extractive Industries
    Thursday, 28 July 2022
    Tax Expenditure Evaluation and Reform
    09.00-09.10Welcome to Day 2 & Setting the Stage
    09.10-10.40Session 5 – Ex-ante Assessment & Ex-post Evaluation of Tax Expenditures
    10.40-11.00Coffee Break
    11.00-12.30Session 6 – Driving Tax Expenditure Reform
    12.30-13.20Closing Remarks
    13.20-14.30Lunch & Depart