By Ali Reza Sarwar
On June 22, the World Bank reported that Tunisia is losing at least US$1.2 billion due to tax evasion by enterprises belonging to well-connected elites. The report comes after the Tunisian government conducted a number of policy reviews to improve the tax collection system and stop further fraud.
The World Bank’s Development Policy Review explains that Tunisia’s tax collection system is fraught with complexity and under reports exports and imports. Furthermore, the system fails to capture revenue from the massive informal businesses sector, which has grown larger in recent years. Currently, tax revenues contribute to 20 percent of GDP and 80 percent of corporate taxation is made by only 1 percent of firms. This means that many corporations receive some form of political treatment or simply manage to operate outside of tax collection regulations.
Tunisians protest elite capture of the government during the Arab Spring. Photo courtesy of the World Bank.
This update on tax fraud comes at a time when Tunisia, once the region’s most thriving economy, is grappling with slow economic growth, rising unemployment, and frequent interruptions in overseas export markets. This includes Libya, Tunisia’s second economic partner after the European Union. Libya committed to supplying 25 percent of Tunisia’s fuel needs at a subsidized price, but cannot honor this agreement now. Additionally, a spate of recent terrorist attacks against tourists will serve as a blow to Tunisia’s tourism sector, which accounted for 15.2 percent of GDP in 2014.
This week in development…
U.S. Development Policy/International Organizations
- The United Nations has requested $1 billion for the first half of 2015 in order to eradicate Ebola in West Africa, especially for Guinea, Liberia and Sierra Leone, where the “epidemic has started to turn.” Valerie Amos, the UN Under-Secretary-General for Humanitarian Affairs and Dr. David Nabarro, the UN Special Envoy on Ebola announced on Wednesday the new appeal for increased aid focused on re-establishing important social services and improving the security of individuals in the region.
- Andrew Lansley, the former UK Health secretary and leader of the House of Commons, is a potential appointee for the role of UN relief head. Lansley faces intense opposition from more than eighty major disaster-relief NGOs globally, who are concerned that his candidacy is driven by his political positioning and that his lack of inexperience could be a serious impediment to the disaster-relief sector. The 80 international relief organizations implored UN Secretary General Ban Ki Moon to establish a panel of experts to help him select the candidate, a move which could hurt Lansley’s prospects.
- The International Labour Organization (ILO) released a statement on Thursday with new data suggesting that private sector services and a rising care economy are expected to provide employment for more than a third of the global workforce over the next five year period. Many public sector services that comprise the service economy, such as health care, education and administration, will be important employment resources. This shift signals the changing role of policies to support enterprise and the labor force. It also illustrates an amplified engagement with opportunities interconnected to new technologies.