GRADE-ing tax policy for sustainable development in Sub-Saharan Africa 

How do we support sustainable development? There are countless answers to this question, with 17 intersecting Sustainable Development Goals (SDGs) presenting numerous opportunities for social, environmental, and economic well-being. An important starting point may lie in the relationship between international policy and national governance – for instance, if a global policy can be made more equitable, it can improve the ability of countries everywhere to meet sustainability goals.  

One of these global forces is tax policy – a subject that Dr Bernadette O’Hare of the School of Medicine investigates through the Government Revenue and Development Estimations (GRADE) team. O’Hare studies the global influences on government revenue in low- and middle-income countries and their subsequent impact on development and fundamental rights. She and Professor Stephen Hall of the University of Leicester lead the GRADE team, which models the relationship between government revenue and sustainable development. Her recent research investigates the effects of global tax policy and illegal financial flows on the progress of Sub-Saharan African countries toward sustainable development. 

GRADE’s model of World Government Revenue per Capita. According to their research, these disparities produce significant challenges to meeting Sustainable Development Goals.

Current international tax laws allow many large companies to find loopholes and evade taxation, limiting governments from funding services such as education (SDG 4), sanitation (SDG 3) and water (SDG 6). As such, these and other forms of illicit financial flows impede national sustainable development.

In May of 2022, calls for a UN resolution on global tax policy emerged from African finance ministers at the 54th session of the Economic Commission for Africa. This followed a landmark report by the UN High-Level Panel on Illicit Financial Flows (IFFs) from Africa that highlighted the detriments of IFFs to national development. During these talks, former President Mbeki of South Africa, chair of the Panel, referenced and utilised the work of O’Hare and colleagues on IFF impacts. Since then, the resolution has been passed, providing an opening for a report on global taxation and progress toward the SDGs. O’Hare and the GRADE team have submitted evidence to this report, which will serve as input for the General Assembly’s 78th session at the end of 2023. Furthermore, GRADE estimations have been used by the global advocacy group Tax Justice Network in evidence submitted to the UN Secretary General.

Audiences at the 54th session of the Economic Commission for Africa, at which evidence from GRADE was used to advance a tax policy resolution.

The work of GRADE could influence national policy. In August 2022, O’Hare and the GRADE team investigated the impact of IFFs on children’s rights in Malawi in collaboration with Rachel Etter-Phoya, who is both a senior researcher for the Tax Justice Network and a research fellow at the University of St Andrews. They found that an increase in government revenue equivalent to tax avoidance in Malawi would allow 125,000 additional people to access basic drinking water and sanitation every year. Over the time studied half a million additional children to attend school for an extra year, and child and maternal mortality to decrease significantly. These findings were presented to senior government officials and bodies that assess the implementation of UN recommendations throughout African nations.

Building from these findings, O’Hare and the GRADE team are advocating for a UN tax convention to ensure that multinational corporations are held accountable to fair tax practices. The team recently published a case study on a telecoms company to illustrate the relationship between corporate taxation and SDGs in six African countries. The team are also planning an expansion of the GRADE model to analyse poverty (SDG 1), energy (SDG 7), climate action (SDG 13), and institutional governance (SDG 16). These new developments will provide further key data that organisations  and policymakers can use to implement equitable, just and sustainable tax policy in Sub-Saharan Africa and around the world.