AfCFTA: Building infrastructure without taxing difficult – Ofori-Atta

The Finance Minister, Ken Ofori-Atta, says embarking on infrastructural development without taxation is a herculean task for African leaders, especially Finance Ministers.

According to him, it’s impossible for African leaders to invest in massive infrastructural development in their various countries if they fail to tax citizens and businesses.

The Group Chief Executive Officer of Ethiopian Airlines, Mesfin Tasew Bekele, lamented over the excessive taxes African governments slap on airlines and other businesses with little infrastructure to boast of.

Speaking during a Business and Policy Dialogue, dubbed, ‘The Kwahu Summit on Africa’s Prosperity’, organized by the African Prosperity Network (APN) in collaboration with the Presidency and the AfCFTA Secretariat, on January 28, 2023, he said airline fares in Africa are very expensive compared to airlines in other jurisdiction.

Mr. Bekele laments, “many countries believe that air transport is good for the rich and has to be heavily taxed. I can give an example, the airfare between Lomé and Accra, 50% of it goes to government and other taxes. This has made air transport expensive to use in Africa compared to the rest of the world. It is understood that African governments want to generate revenue and are taxing the airlines. But the tax should be reasonable… We don’t have tax issues in the US, Europe, Middle East and Asia.”

He appealed to African governments to benchmark the tax systems on airlines.

“We have problems of tax only in Africa, why? I think governments have to benchmark the tax systems on indigenous airlines, this is dwarfing the indigenous African airlines by making the fare very expensive and non-affordable to Africans. But at the same time, a different regime of tax is applied to airlines in Africa. Let me be honest with you, the offices of small airlines in Africa are often closed due to unreasonable tax, we have to correct this. Again, infrastructure. For air transport to be safe, and efficient, we need to have enough airports and upgrade existing airports”.

Mr. Ofori-Atta responding to the Group Chief Executive Officer of Ethiopian Airlines, said, “So I listened to my friend from Ethiopian airlines, and yes we must ensure that we make it a tax-friendly continent”.

He added, “He would want us in government to support infrastructure and ensure that you fly easily around the continent. It’s a very difficult balance and I felt the need to at least mention it. And to represent the difficulties that African finance ministers face. How do you build infrastructure and not tax and still improve intra-African trade? That is our challenge”.