Johannesburg - In periods of crisis there is a need for strong governments with access to the necessary resources, according to Minister of Finance Pravin Gordhan.
Speaking at an international investment conference this week, he added that it was concerning that access to these resources was being challenged by companies, which were making every attempt to minimise their tax contributions.
The international investors, who are in Cape Town for the annual UN Principles for Responsible Investment (PRI) conference, represent funds of about $34 trillion (R341 trillion).
The PRI is a UN-backed initiative to which more than 1 200 investment institutions from across the globe have signed up. About 44 South African investment institutions are among the signatories, the most notable being the Government Employees Pension Fund (GEPF) and the Eskom Pension and Provident Fund.
In his keynote address, Gordhan said a commitment to responsible investing implied there would be a change in behaviour with the realisation that “tax avoidance is not an acceptable practice”.
Gordhan told the delegates that there had been a “significant mind shift” towards Africa, initially from regarding it as the dark continent to the semi-dark continent and now people should be seeing Africa as the future saviour of global growth.
“Africa has probably the fastest-growing middle class in the world,” he noted.
John Oliphant, the principal executive of the GEPF, told the conference that despite the progress that had been made and despite the number of international investors that were investing in Africa for long-term growth, “the perception gap still remains a factor”.
“One of the contributors to this gap is poverty and growing inequality. We cannot escape the fact that the eradication of poverty from the continent is our greatest challenge and our most formidable task as leaders and responsible investors.
“It must feature among the top priorities of all international organisations and governments for policy implementation, including us.”
In her address Sharan Burrow, the general secretary of the International Trade Union Confederation (ITUC), spoke of concerns about the erosion of the tax base suffered by many countries.
“National tax laws have not kept pace with the globalisation of corporations and the digital economy, leaving gaps that can be exploited by multinational corporations to artificially reduce their taxes.”
Burrow, who believes that the global economy is no more stable than it was five years ago and that the underlying cause of the financial crisis has not been addressed, said funds that managed workers’ pensions should hold businesses to account for their tax management schemes. She added that the ITUC would continue to campaign for multinationals to disclose publicly information about their global allocation of income, economic activity and taxes paid. - Business Report