Search

Begin New Search Topic Tax Systems Publishing Institution Afrobarometer

1. Value for money?

Author:
Ronald Makanga Kakumba and Matthias Krönke
Publication Date:
10-2023
Content Type:
Special Report
Institution:
Afrobarometer
Abstract:
Governments rely on tax revenue to finance investments in human capital, infrastructure, and public services for their citizens. The quality of government services and a country’s development can be jeopardized if taxes are not collected, are squandered, or are misappropriated by the government. According to statistics from the Uganda Revenue Authority (URA), about 2.6 million Ugandans were registered taxpayers as of September 2022, but only about 1 million Ugandans are actively paying taxes (Kayiwa, 2022; Oketch, 2021). Analysts attribute the low tax-revenue collections to inadequate administrative capacity, weak checks and balances, and a lack of social norms for tax compliance, among other factors (Lakuma & Lwanga, 2017). Even so, during the 2021/2022 financial year, the URA collected 21.7 trillion Ugandan shillings (UGX) (USD 5.9 billion), its highest-ever revenue collection, reflecting a 12% increase over the previous year. This amount fell just short of the target of UGX 22.4 trillion (Wanyenze, 2022). However, there is little cause to celebrate, for several reasons.
Topic:
Corruption, Public Opinion, Tax Systems, and Revenue
Political Geography:
Uganda and Africa

2. Taxation for development: The impact of the Ebola epidemic on citizen support across West Africa

Author:
Juan Antonio Martínez-Sánchez and Shaun Da Costa
Publication Date:
07-2023
Content Type:
Working Paper
Institution:
Afrobarometer
Abstract:
We explore the impact of the Ebola epidemic on attitudes toward taxation for development in West Africa. Utilising representative surveys from before and after the peak of the crisis, we estimate the impact of Ebola using both objective (recorded case rates) and self-reported measures of exposure (knowing a friend/relative who was infected with/died from Ebola). In addition, we consider the indirect impact of Ebola on redistributive preferences through disruption to different domains of life, including school, work, social gatherings, and medical care. Our empirical analysis demonstrates that higher levels of Ebola exposure and disruption are associated with greater levels of support for taxation for development.
Topic:
Development, Governance, Ebola, Tax Systems, and Institutions
Political Geography:
Africa, Liberia, Sierra Leone, and Guinea

3. Footing the bill? Less legitimacy, more avoidance mark African views on taxation

Author:
Thomas Isbell
Publication Date:
02-2022
Content Type:
Working Paper
Institution:
Afrobarometer
Abstract:
Taxation is a key fiscal tool for domestic resource mobilization. In many African countries, however, weak tax-administration systems limit the ways in which governments can finance their development agendas and provide essential services such as health care, education, and infrastructure (Drummond, Daal, Srivastava, & Oliveira, 2012). The importance of raising resources through taxation has been heightened by the COVID-19 pandemic. Governments globally have confronted a sudden drop in tax revenue as many economic sectors have slowed amid lockdowns. Especially in developing countries, this shock has significantly curtailed governments’ ability to fund access to vital health, financial, and other services and assistance to those most affected by the pandemic (Gaspar, Hanif, Pazarbasioglu, & Saint-Amans, 2020). The reduction in tax revenue during the pandemic is likely to compound itself over time and limit how quickly developing economies can bounce back as governments lack the fiscal resources to stimulate growth. Even without a pandemic, tax revenues are relatively low across Africa. In 2019, 30 African countries averaged tax revenues totaling 16.6% of gross domestic product – half the 33.8% collected by member countries of the Organisation for Economic Co-operation and Development (OECD/AUC/ATAF, 2021). In addition to capacity limitations of government tax agencies, low tax revenues can be related to macroeconomic factors such as large agricultural and informal sectors, which are typically hard to tax (Di John, 2006; Mansour & Keen, 2009; Coulibaly & Gandhi, 2018; Moore, Prichard, & Fjeldstad, 2018). One current debate concerns how to tax highly digitalized businesses – which operate in African countries without necessarily having an easily taxable physical presence – in a way that is fair and doesn’t impede the growth of start-up companies (African Tax Administration Forum, 2020). But low tax revenues can also reflect micro-level factors such as citizens’ limited willingness to pay taxes (“tax morale”), a lack of knowledge about what they owe and what their taxes are used for, and their perceptions of corruption in the tax administration (OECD, 2019). If citizens regard paying taxes as a fiscal exchange or contractual relationship (Moore, 2004), these factors can affect the perceived legitimacy of taxation as a whole (D’Arcy, 2011). Beyond short- and medium-term fiscal problems, this can also have a more fundamental impact on the legitimacy of governments and political systems. The ability to raise revenue through taxes is an important marker of state capacity and political legitimacy (Brautigam, Fjeldstad, & Moore, 2008), and may contribute to government responsiveness and accountability as taxpayers demand a return on their taxes (Moore et al., 2018). How do Africans see taxation? Afrobarometer survey data collected in 34 African countries in 2019/2021 show that a majority of Africans endorse their government’s right to collect taxes. But popular support for taxation has weakened over the past decade while perceptions that people often avoid paying their taxes have increased sharply. Moreover, many Africans question the fairness of their country’s tax burden, and only half think their government is using tax revenue for the well-being of its citizens. While a majority would pay higher taxes to support young people and national development, most say they find it difficult to get information about tax requirements and uses, and many see tax officials as corrupt and untrustworthy. Such perceptions may play a role in how willingly citizens support – and comply with – their government’s tax administration.
Topic:
Political stability, Tax Systems, Legitimacy, and State Funding
Political Geography:
Africa

4. Tax Disobedience in Côte d’Ivoire

Author:
Joseph Kone
Publication Date:
06-2021
Content Type:
Policy Brief
Institution:
Afrobarometer
Abstract:
Since the end of its civil war in 2011 and the installation of President Alassane Dramane Ouattara, Côte d’Ivoire has seen one of the highest rates of economic growth in Africa, sometimes referred to as a new “Ivoirian miracle” (Dionne & Bamba, 2017). As the economy has grown and the state has rebuilt capacity, tax revenues have increased steadily, growing by 37% between 2013 and 2017. In many African states, «import and export taxes constitute the backbone of tax regimes. Revenues are supplemented by indirect taxes, in the form of excise and sales taxes» (D’Arcy, 2011). In the case of Côte d’Ivoire, the government relies heavily on taxes on the export of cocoa and other agricultural products, in addition to taxes on industrial and commercial profits, income, telecommunications, petroleum products, imports, as well as a value-added tax (Ministère du Budget et du Portefeuille de l’Etat, 2020). Even in states with high levels of coercive capacity, citizens’ willingness to pay taxes is a significant determinant of revenues collected. This willingness becomes even more important in contexts of relatively low state capacity, such as has existed in post-conflict Côte d’Ivoire. In fact, a substantial – and growing – proportion of Ivoirians question the state’s right to collect taxes, a fact that could present a significant challenge to the government’s ability to collect revenues in order to rebuild essential state services and avoid excessive debt. This paper focuses on a particular form of tax non-compliance: tax disobedience, or individuals’ refusal to pay taxes and fees as a form of protest. Specifically, it examines several individual-level factors that might be associated with tax disobedience, including lack of a cash income, assessments of public services and elected representatives, accessibility of information, and effective connections with the Ivoirian nation. Our analyses of data from the Afrobarometer Round 7 survey (2017) suggest that some of the conventional wisdom on tax compliance is not supported in the case of tax disobedience in Côte d’Ivoire. While we find, as expected, that individuals who think state performance is improving in delivering key services are less likely to express a willingness to engage in tax disobedience, we find no such link with lived poverty; poorer Ivoirians are no more or less likely than their wealthier counterparts to endorse tax disobedience. Surprisingly, assessments of elected representatives and of corruption in the tax system are not significantly associated with tax disobedience, either. Perceived access to government information and identification with the Ivoirian nation do show associations with tax disobedience, but these links run counter to our expectations: Citizens who think they could access information held by public bodies are significantly more likely to say they engaged or would engage in tax disobedience, as are people who identify more closely with the nation than with their ethnic group. These analyses suggest the need for more research on a crucial question facing African states: Who pays taxes, and who doesn’t?
Topic:
Civil Society, Tax Systems, Revenue Management, and Tax Evasion
Political Geography:
Africa and Côte d'Ivoire

5. Electricity provision and tax mobilization in Africa

Author:
Moussa Blimpo, Justice Tei Mensah, K. Ochieng’ Opalo, and Ruifan Shi
Publication Date:
04-2018
Content Type:
Working Paper
Institution:
Afrobarometer
Abstract:
In this paper, we provide evidence on how the provision of social infrastructure such as reliable electricity can be leveraged to increase taxation in developing countries, particularly sub-Saharan Africa (SSA). First, using comprehensive data from the latest round of the Afrobarometer survey, we estimate, via the instrumental variable approach, the effect of access and reliability of electricity on tax compliance attitudes of citizens in 36 SSA countries. Evidence from the paper shows a significant positive effect of electrification on tax compliance attitudes with potentially strong externalities. Also, we find that reliability of supply is crucial in explaining the impact of electricity access on attitudes toward taxes. Second, we provide suggestive evidence on national identity as one channel driving this impact. Access to social amenities such as electricity induces a sense of national identity among citizens, thereby incentivizing them to contribute, through taxes, toward the functioning of the state.
Topic:
Nationalism, Identities, Tax Systems, and Electricity
Political Geography:
Africa and Sub-Saharan Africa

6. Tax Compliance Africans Affirm Civic Duty but Lack Trust in Tax Department

Author:
Thomas Isbell
Publication Date:
12-2017
Content Type:
Policy Brief
Institution:
Afrobarometer
Abstract:
In any economy, balancing expenditures, revenues, and debts is a delicate and often politicized task. Competing interests and priorities buffet those tasked with planning a viable and stable national budget. For any state, taxes raised from individuals and businesses are a central plinth supporting the provision of services, the maintenance of infrastructure, the employment of civil servants, and the smooth functioning of the state. In many African countries, however, tax evasion leaves states with major holes in their budgetary pockets. A 2015 report by the High Level Panel on Illicit Financial Flows from Africa cites tax abuse as an important contributor (along with laundering of criminal proceeds, corruption, and market abuse) to an estimated $30 billion to $60 billion per year that African governments lose to illicit financial flows, hampering growth through state investment, improvements in education and health services, and lower debt commitments abroad (United Nations Economic Commission for Africa, 2015a, 2015b; Guardian, 2015). The 2016 leaks of the “Panama Papers” exposing tax evasion and fraud among many African and world leaders and their families further underlined the magnitude of the burden that tax evasion places on the continent (Kuo, 2016; Copley, 2016). Moreover, low tax compliance weakens the state’s ability to invest and develop. In 2005, only 15% of gross domestic product (GDP) in developing countries derived from taxes, compared to 35% in developed countries (Fuest & Riedel, 2009). In some of the poorest countries, this proportion was 12%. Cobham (2005) estimates that low tax compliance in developing countries costs around $285 billion per year. For many Africans, however, not paying taxes may be less a matter of choice than of insufficient efficacy. As Aiko and Logan (2014) report, majorities of Africans say it is difficult to find out what taxes they’re supposed to pay and how their government uses tax revenues, and many see tax officials as corrupt. Ali, Fjeldstad, & Sjursen (2013) have found that not understanding how taxes are used is negatively correlated with tax compliance. They also point out that many Africans pay private or non-state providers for services that would commonly be provided by the state, which might also tend to depress tax compliance. This paper examines the views and experiences of ordinary Africans related to tax compliance. Afrobarometer survey data indicate that a strong majority of Africans see paying taxes as a civic duty that is important to a country’s development and should be fulfilled regardless of whether one is dissatisfied with government services. But low levels of public trust and high levels of perceived corruption in the tax department dampen citizens’ support for tax compliance.
Topic:
Civil Society, Governance, Tax Systems, Bureaucracy, and Tax Evasion
Political Geography:
Africa

7. Are Africans Willing to Pay Higher Taxes or user Fees for Better Health Care?

Author:
Thomas Isbell
Publication Date:
12-2016
Content Type:
Policy Brief
Institution:
Afrobarometer
Abstract:
In many parts of Africa, access to and quality of medical services remain poor (Deaton & Tortora, 2015; KPMG, 2012; Lowell, Conway, Keesmaat, McKenna, & Richardson, 2010; Streefland, 2005). While economic growth in recent decades has fostered improved health care on the continent, weak funding, brain drain of trained professionals, and ongoing battles with diseases such as TB, HIV, diarrheal diseases, and malaria as well as recurring epidemics such as Ebola continue to put immense pressure on medical systems in many countries (Ighobor, 2015; McKay, 2015; Chothia, 2014). Struggling medical systems confront governments and citizens with difficult choices: Needed investment in the medical sector must compete with other priorities, and increasing health spending by cutting other programs may not be a popular or even feasible solution. One alternative may be to raise taxes or user fees in order to increase available funding. In its Round 6 surveys, Afrobarometer asked citizens in 36 African countries whether they would support or oppose paying higher taxes or user fees in order to increase government spending on public health care. This paper describes citizens’ responses and analyzes whether they are correlated with demographic factors, access to health services, and perceptions of health care, government performance, and official corruption.
Topic:
Civil Society, Health Care Policy, Tax Systems, and Public Health
Political Geography:
Africa

8. Africa's Willing Taxpayers Thwarted by Opaque Tax systems, Corruption

Author:
Rose Aiko and Carolyn Logan
Publication Date:
03-2014
Content Type:
Policy Brief
Institution:
Afrobarometer
Abstract:
Afrobarometer survey data, covering 29 countries in sub-Saharan Africa reveal widespread citizen commitment to the principle of taxation and to taking responsibility – by paying their taxes – for national development. But taxation systems across the continent remain opaque to large majorities. Most find it difficult to know what they owe, and the public is even more in the dark when it comes to understanding how tax revenues are actually used by governments. Moreover, perceived corruption among tax authorities remains significant, and evidence suggests these perceptions undermine public commitment to the integrity of the tax system and increase the likelihood of non-compliance.
Topic:
Corruption, Governance, Tax Systems, and Bureaucracy
Political Geography:
Africa

9. To pay or Not to Pay? Citizens’ Attitudes towards Taxation in Kenya, Tanzania, Uganda and South Africa

Author:
Merima Ali, Odd Helge Fjeldstad, and Ingrid Hoem Sjursen
Publication Date:
12-2013
Content Type:
Working Paper
Institution:
Afrobarometer
Abstract:
This paper examines factors that determine citizens’ tax-compliance attitude in Kenya, Tanzania, Uganda and South Africa. Using the 2011/12 Afrobarometer survey data, we find that tax-compliance attitude is positively correlated with the provision of public services in the four countries. However, the correlation depends on the specific service in question and differs between countries. Tax knowledge and awareness are found to be positively correlated with tax-compliance attitude. On the other hand, frequent payment to non-state actors in exchange for security and individual’s perception that their own ethnic group is treated unfairly by the government are negatively correlated with tax-compliance attitude.
Topic:
Non State Actors, Citizenship, Tax Systems, and Social Services
Political Geography:
Uganda, Kenya, Africa, South Africa, and Tanzania