Financing basic education through taxation


17 December 2015

Avatar Technologies can help fill the education funding gap by optimizing tax collection in developing countries.

“Education is the most powerful weapon which you can use to change the world”. These words by Nelson Mandela echo far and wide and explain why education ranks so high among the developing world’s priorities. Education is indeed the second of the UN’s eight Millennium Development Goals and is in fourth position on the list of Sustainable Development Goals.

Despite the obvious necessity to make quality basic education accessible to all, the lack of sufficient funds remains an issue. The gap in the annual external financing for basic education in low-revenue countries has increased from US$16 billion to US$26 billion over the past three years.

A UNESCO guidance document entitled Making Education for All Affordable by 2015 and Beyond highlights that this increase in the financing gap is mostly due to the stagnation of the aid allocated to basic education in low-revenue countries. The national expenditure dedicated to education, on the other hand, has increased by US$3 billion in these countries over the past few years. Still, it only represents half of the amount required to achieve the objective of providing basic education to all.

The guidance document suggests that, in order to make up for the stagnating foreign aid, developing countries should find new ways to generate additional revenue to finance their development. It highlights the fact that an improvement of the tax system of these countries could reduce the funding gap by US$7.4 billion.

Electronic tools have proved to be the best way to achieve better control of taxation, provided they have been specifically adapted to the country’s actual environment. Avatar Technologies, a parent company of Global Voice Group, helps emerging and developing countries improve and leverage their tax system through such electronic solutions. Avatar Technologies offers an Electronic Fiscal Declaration (EFD) solution that optimizes tax collection and compliance in the retail sector.

The EFD solution is however more than a mere tax management system. It provides the cutting-edge technological basis for an innovative financing mechanism that aims to boost development through the generation of additional tax revenue. The governments are then free to spend this revenue on development programs – such as making quality basic education accessible to all – while lessening the need for foreign aid.

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