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 weekend was an active one for voters around the world– citizens across Ukraine, Brazil, Tunisia, and Uruguay went to the polls on Sunday, and now have newly elected governments. These elections drew keen interest from international observers, and as we face down crisis and uncertainty around the world, are certain to have global implications. Here’s what you need to know from the weekend’s democratic exercises:
Ukrainian President Poroshenko with Secretary of State John Kerry this June. Photo courtesy of U.S. Department of State
This week in development…
Pakistani teen Malala Yousafzai was awarded the Nobel Peace Prize this week
- The World Bank released a report titled The Economic Impact of the 2014 Ebola Epidemic, estimating total economic loss associated with the outbreak could be as high as $32.6 billion by the end of 2015. The crisis has been escalating, and according to WHO officials is “much worse than it was 12 days ago.” Today, in a move to combat the outbreak, the U.S. Congress approved another $700 million in funding.
- This week over 10,000 development stakeholders were in Washington D.C. for the 2014 Annual World Bank and IMF Meetings. There are over 70 different panels and conferences on the official schedule, not to mention hundreds of meetings with periphery organizations. This weekend’s major highlights will include high-level meetings on the State of the Africa Region, Development Committee Press Conference, and The Future of Finance.