This Special Issue is dedicated to honouring the contributions of Prof. Sol Picciotto, a champion for tax justice and a distinguished academic who has made significant contributions in the area of international taxation. In this Special Issue, the authors explore two prominent themes in Prof. Picciotto’s research: unitary taxation through global formulary apportionment and the internationalisation of the State.

Verónica Grondona discusses how theories of the state and its internationalisation provide a framework for discussing the challenges of international taxation. Prof. Reuven Avi-Yonah discusses what potential options exist for the United States, should global agreement on Pillar One fail to be achieved. Prof Kerrie Sadiq discusses formulary apportionment in the context of the extractive industry and how this may be employed to provide a fairer way to tax resource rents. Merlene Amonde and Salma Nechesa Abdulaziz discuss unitary taxation from the perspective of Africa’s extractive sector, and Kenya’s transfer pricing experience.

The Special Issue concludes with some reflections from Prof. Sol Picciotto himself. In his reflections, he highlights various aspects of his professional journey, from the initial motivation to study law and how that eventually led him to the quest to understand how multinationals are taxed, his championing of the unitary taxation of multinationals and the various other pivotal contributions he has made in the area of international taxation.

This Special Issue would not have been possible without the great efforts of the guest editors, Abdul Muheet Chowdhary and Tatiana Falcăo together with all the guest peer reviewers who provided invaluable feedback to the authors.

This special issue is dedicated to the work of the UN Independent Expert on Foreign Debt and Human Rights. It focuses on increasing transparency, clarity and participation in fiscal policymaking related to debt and to examine the impact on financing progress towards the achievement of human rights. The African revenue generation and budget cycle which has been modelled along the colonial version of a tax system for Africa is not effective to secure redistribution towards social spending and has shown vulnerability to external erosion of the tax base. This has resulted in a low taxable base, a ‘race to the bottom’, rising debt, structural inequalities undermining access to public resources by the poor and communities facing continuous discrimination. It has distorted redistribution that directs development away from grassroots levels and progress towards the achievement of human rights. It has also engineered the lack of equal bargaining power within the international financial architecture where the fiscal system of Africa is conditioned to support the fiscal systems of the advanced economies. This special issue is funded by OSIEA under Grant ID: OR2021-83193 on “To Support Training on Debt and Human Rights to Increase Participation in Fiscal Policy and Research”

Special Issue Editor:

Lyla Latif

Dear Readers,

Jean Baptist Colbert once said that:

“The art of taxation consists in so plucking the goose as to obtain the maximum amount of feathers with the smallest amount of hissing’.

The articles that feature as part of this year’s issue float towards Colbert’s sentiments.  Starting with Professor Steven A Dean who draws attention to the complex pattern of formal and informal rules that govern the taxation of cross-border transactions. He argues that these historical rules divest out of the Global South a menu of taxable items, which then restrict the source countries to claim their fair share of tax. Next, Ochieng and Agwaya discuss the effectiveness of imposing excise taxes as a method to achieve economic development. In plucking the tax goose feathers using minimal imposition of excise tax, they empirically argue, it goes against the canon of equality. Pushkareva picks up the argument of inquiring into the principles of a good taxation policy to address whether a menu of taxes imposed on the digital financial services sector steers economic growth in sub-Saharan Africa or places a growing burden on the consumer. Ahmad et al., then contextualise the taxation of digital transactions to explain that the imposition of this form of tax is crucial for steering the oil tax revenue intensive Nigerian economy towards an alternative sustainable tax base that can support development finance. Moving away from the discussion of taxing the digitalised economy, Mwencha and Jalipa take up a different issue on the tax and development interface. They examine how social protection, an intended objective of taxation, has oscillated within public finance. Shah then follows with her argument on the imporatnce of public finance measures to protect wetlands. She links the redistribution of taxation towards education as an important objective towards sustaining wetlands. Her argument reveals the importance of wetlands towards human development and meeting of specific SDG targets.

The authors drive across the point that fiscal policy is one of the most effective tools to implement domestic economic and finance policies that are targeted towards social development and economic improvement. They show us why taxes are central to designing and implementing fiscal policy that is inclusive and representative on one hand, and on the other, fair on the market and economic players. Dear readers, taxes can fund human capital development, physical infrastructure, and the provision of basic goods such as water and food, education, health and social security transfers.

Lyla Latif

Managing Editor 2018-2021

Dear Readers,

Finance is fragile if not responsibly administered, managed, accounted, and matched to development needs. Responsible financing is a reaction against poverty and a commitment towards socio-economic development. The theme that underpins this Issue looks into the role of finance in development. It starts by questioning the role of finance in sustaining social development. Dr. Tom Namwambah, Dr. Paul Ogendi, and Lyla Latif separately examine the impact of fiscal law and policy making on the development of the education and health sectors. The relationship of finance with these two sectors is shown to have been downplayed over the years to the effect that law while creating rights does not embed them on a sound fiscal plan for their targeted implementation. We are then left with instances of rights without financial backing. Arguably, these general conclusions made by the three authors who look at Kenya as their case study confirm the government’s position in the 1965 Sessional Paper that prioritised economic development over financing social rights.

Following this, in the second part of the 2020 Issue, lead authors Rachel Etter-Phoya, Mary Ongore, Joan Atim and Witness Nabalende direct their examination of the relationship of finance  with the economy. Their perspectives differ. Rachel Etter-Phoya, Markus Meinzer and Shanna Lima consider the implications of tax avoidance and evasion practices by corporations that undermine the role of finance in development. Their claims reveal that secrecy jurisdictions promote financial fragility within the African continent. Mary Ongore and Bosire Nyamori both argue that finance is critical towards development but that this can be constrained through the creation of cross-border investment vehicles (CIVs). CIVs will prove useful to development needs where legal systems are able to capture wealth created and moved through CIVs. Taxation improves the confidence in the future of markets. Picking up on the future of markets, Joan Atim considers it from the perspective of tax reliefs, arguing that domestic tax policy and double tax agreements must not elicit ambiguous interpretation on the applicable tax reliefs. Witness Nabalende wraps this part by considering foreign direct investment and protection of foreign nationals as the key target market in discussing finance and development. The discussions made by these authors put forward the elements of a critical finance view of the economy, that is, they explain how finance and its architecture can aid or disturb the economy.

Not leaving digitalisation behind from discussions around the role of finance in development, three authors in the third part of the 2020 Issue reflect on how revenue authorities are responding to capturing finance through the digitalized economy. Simbarashe Hamudi reflects around tax reforms necessary to tap revenue out of the digitalized economy. Professor Honest Ngowi highlights the implications of the technologies driving the Fourth Industrial Revolution on the taxation profession. Ivan Mugabi reflects on how digital business models pose taxation challenges for the countries and recommends the need for more capacity building for revenue authorities. These authors collectively agree that the digital age is transforming everything, the nature of markets and products, how to produce, how to deliver and pay, the scale of capital to operate globally, and human capital requirements. It is also boosting productivity, exposing companies to new ideas, technologies, new management and business models, and creating new channels of market access and all of this at relatively low costs. The digital economy is key to finance sustainable development through increase in tax revenue collections.

Our student researchers at CFS have also contributed to this Issue with their insights on the key themes underpinning narratives around finance and development. Evelyne and Elvis revisit the constitutional case filed against the validity of the Double Taxation Agreement between Mauritius and Kenya giving their take on what they think the judges should have focused on. Finally, Afshin and Vallarie give a critical eye on the importance of access to information insofar as government loans are taken out by state owned enterprises. Clearly, the lack of transparency around SOE borrowing is an indicator of illicit financial flows - a panacea to development.

I now invite you to enjoy your reading. I take this chance to compliment the authors and our student contributors, thank our peer reviewers and our editorial advisory board. We are grateful to the University of Nairobi for hosting the journal.

Lyla Latif,

Managing Editor

August 2020

We are proud to publish our inaugural Journal on Financing for Development. The idea for developing this journal arose out of the need to widely share the research and thinking of our academic and professional guests who were invited to speak at our Tax Talks public forum at the University of Nairobi, School of Law. These Tax Talks have been organised by us; the Committee on Fiscal Studies, since 2017 and have brought to the fore central issues around fiscal studies highlighting how and why fiscal laws and policies matter as an instrument of governmental and societal power. Relatedly, our Tax Talks have focused on addressing concerns around socio-economic justice and sustainable development to better understand how finance can solve and mitigate these concerns. It is our hope that this journal presents our readers with further reflection on the interplay between socio-economic realities with national and global fiscal landscapes. Accordingly, in this volume, seven thematic areas are presented and discussed from a legal, anthropological, business and faith-based perspective.

 The first theme is on tax treaties presented by Professor Picciotto. He studies the interactions between national and international tax laws with respect to tax treaties. This is in order to understand the role   of law and lawyers in creating complexity and obscurity in the interpretation of legal texts thereby restricting access to only those with the resources to invest in the intellectual capital needed to master tax related arcane concepts and language.

The second theme is on fiscal philosophy discussed by Professor Waris. She investigates whether African countries have a clear written fiscal philosophy and policy that captures the retention of mobilised resources for development investment oriented towards economic growth. Her paper proposes a concrete principled analysis of what philosophy and principles ought to guide all fiscally related decisions of a state and its constituent society.

The third theme is on religious discourse examined by Dr. Jörg Alt SJ. He considers the interplay between religion and tax principles in order to optimize the allocation of sources of revenue to curb social inequalities. His paper proposes a model based on Catholic Social Teaching to reduce instances of tax evasion and exploitation by the liberal market.

The fourth theme is on e-commerce set out by Dr. Mwencha. He comments on how digital developments can lead to broadening the tax base of developing countries. His paper focuses on the challenges of e-commerce models and the problems they present for revenue authorities to determine tax liability.

The fifth theme is on digitalising tax presented by Ms. Elmi. In her paper she attributes societal injustices to historical (including colonial) influences on the formulation of tax legislation. Her paper argues   that discriminatory and oppressive practices in organizing pre-modern society and centralizing fiscal power has resulted in ineffective tax administration and restrictions towards shifting tax governance to contemporary digital models in order to optimize its collection.

The sixth theme is on public procurement examined by Mr. Thiankolu. He explores how discretion in the regulation of procurement has resulted in redirecting financing for development towards private interests thereby stunting economic growth and reducing spending on public goods.

The final theme concerns Savings and Credit Co-operatives Societies in Kenya commented on by Ms. Saina. She introduces the legal and regulatory framework for SACCOs briefly arguing for their tax exemption, since their aim is to promote pro-poor growth. Taxing SACCOs therefore results in negligible savings by the poor.

Not only have our authors focused their attention on what constitutes socio-economic justice and sustainable development, their scholarship greatly helps us to better understand how finance can solve and mitigate the fiscal concerns set out in their discussions. This journal is indebted to them.

I am pleased to announce this journal.

Lyla A. Latif

Managing Editor

July 2019