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81. Fiscal Policy Letter No5: Improving Financial Inclusion To Broaden The Tax Base In Cameroon

Author:
Jean-Cedric Kouam and L.B. Bongbinsin
Publication Date:
07-2021
Content Type:
Working Paper
Institution:
The Nkafu Policy Institute
Abstract:
For several months, Cameroon has been facing the ravages of the pandemic caused by the coronavirus. To stop the spread of the virus, the Cameroonian authorities in April 2020 announced a series of fiscal easing measures to help companies and households in difficulty. Estimated at more than 114 billion CFA francs according to the Director-General of Taxation, the decisions taken have profoundly impacted public finances. Indeed, well before the pandemic, the country was already facing a high risk of external debt overhang (IMF, 2018) and immense security challenges in the North and the Anglophone regions. Despite this constraining socioeconomic and political context, the state must find the necessary and sufficient resources to ensure its proper functioning and territorial integrity. This fiscal policy letter proposes through analyzes a way for the government of Cameroon to increase its tax revenues in the coming years without penalizing growth: improving financial inclusion. The goal is to eliminate all constraints that exclude the most disadvantaged from full participation in the financial sector. The letter is structured around six key points. First, we provide an overview of Cameroon’s financial inclusion situation. Second, we analyze the factors that explain economic agents’ access to financial services, the transmission mechanisms between the financial and formal sectors, and the barriers to financial inclusion in Cameroon. Our results show that a deepening of the financial system would likely positively affect tax mobilization in Cameroon. Estimates show that a 10% increase in financial assets would lead to a 1.87% increase in tax revenue, equivalent to CFAF 49.70 billion – based on the level of tax revenue projected in the 2021 budget law. Similarly, a 10% increase in the number of secure servers – better access to the internet – would lead to a 1.1% increase in tax revenue, equivalent to CFAF 30.62 billion. This improvement in access to financial services for all economic agents – households, businesses – requires the public authorities to make the current regulations more flexible and increase the banking network’s density. This includes the development of payment systems, the construction of quality infrastructures, the definition of mechanisms to limit massive illicit capital flight, and the multiplication of consumer/investor protection guarantees.
Topic:
Development, Infrastructure, Governance, Finance, and Tax Systems
Political Geography:
Africa and Cameroon

82. Perspectives on the Formalization of the Informal Economy in Cameroon

Author:
Joel Moudio Motto
Publication Date:
10-2021
Content Type:
Working Paper
Institution:
The Nkafu Policy Institute
Abstract:
Informal sector practices are the third most frequently cited barriers – after corruption and administrative bureaucracy – for formal enterprises in sub-Saharan Africa (Moyo & Sibindi, 2020). To address this, many programs are being implemented to crack down on and penalize non-compliance. Policies are also being implemented for reducing registration costs and imposing taxes on informal activities and formalization campaigns (De Mel et al., 2014). The issues raised by these measures are fiscal and compliance issues. From this point of view, the non-participation of the informal economy in tax revenues limits the action of the State, hence the need to formalize, by organizing informal channels into associations or interest groups, despite the tax and standardization challenges.
Topic:
Economics, Governance, Tax Systems, and Informal Economy
Political Geography:
Africa and Cameroon

83. Ease of Paying Taxes In Cameroon

Author:
Henri Kouam
Publication Date:
10-2021
Content Type:
Working Paper
Institution:
The Nkafu Policy Institute
Abstract:
The Doing Business Index of the World Bank ranks economies based on their performance in several businesses and governance-related indicators. One of the most important indicators for developing economies such as Cameroon is the “Paying Taxes Indicator,” as investors closely watch this metric to determine the attractiveness of a country to Foreign Direct Investment.
Topic:
Governance, Finance, Tax Systems, and Banking
Political Geography:
Africa and Cameroon

84. Interrogating the Inclusiveness of the Cameroon Tax Policy

Author:
Fabien Sundjo and Bin Joachem Meh
Publication Date:
10-2021
Content Type:
Working Paper
Institution:
The Nkafu Policy Institute
Abstract:
Management of the State requires resources and one of the major sources of income to the State is tax. Taxation is one of the most effective internal measures that the government use to raise resources needed to meet their social, economic and political objectives. Taxation is a sovereign right of the state where resources are transferred from private accounts to public use in order to achieve the economic and political objectives of society (Moore, 2014). The economy of Cameroon like any other economy in the world has basically two types of taxation systems which include; direct and indirect taxation through which the government can raise its revenue. In the process of fostering the objectives of revenue collection by the State, care needs to be taken not to discriminate between women and foreign groups (Amin, 1998). The Cameroon Government’s Vision 2035, a road map to become an emerging economy by 2035, stresses the importance of large-scale infrastructure development and the need to attract more foreign direct investment (FDI). In this light and in April 2013, the Cameroon Government enacted an Investment Promotion Incentives Law whose aim is to motivate foreigners to bring-in capital and to allocate it within major sectors in need of capital in order to boost the economy. Cameroon’s development strategy is to attract funding from foreign countries and invest them in large infrastructure. Statistics, and figures from the World Bank show that the flow of FDI to Cameroon is relatively low but steadily increasing. This pattern can be explained by both the favorable tax system and the welcoming nature of Cameroonians (Cameroon US Embassy, 2019). The objective of this work is to interrogate whether the Cameroon tax system discriminates between women and foreigners. Tax discrimination is a situation where by some individuals pay tax differently from others.
Topic:
Civil Society, Governance, Tax Systems, and Inclusion
Political Geography:
Africa and Cameroon

85. The American Jobs Plan: The Made-in-America Tax Plan

Author:
Committee for Economic Development of the Conference Board
Publication Date:
04-2021
Content Type:
Policy Brief
Institution:
The Conference Board
Abstract:
President Biden proposes to follow up on his $1.9 trillion “American Rescue Plan” with a new “American Jobs Plan” and a “Made-in-America Tax Plan.” A White House fact sheet was released early on Wednesday, March 31. It did not include a clearly itemized cost statement, but the total of the initiatives is apparently in excess of $2 trillion over eight years. Some portion of that cost is claimed to be offset— over 15 years—by corporate income tax increases included in the tax plan.
Topic:
Employment, Tax Systems, Public Policy, and Joe Biden
Political Geography:
North America and United States of America

86. American Families Plan

Author:
Committee for Economic Development of the Conference Board
Publication Date:
04-2021
Content Type:
Policy Brief
Institution:
The Conference Board
Abstract:
As the President indicated when he released his “American Jobs Plan” in March, he presented his “American Families Plan” on April 28, the day of his address to Congress. This new plan is additive with the previous one, and would spend (including through tax cuts—$1 trillion in spending strictly defined, and $800 billion in tax cuts) an additional $1.8 trillion, which is proposed to be financed by tax increases on upper-income individuals. (The $2 trillion American Jobs Plan was to be paid for by increased taxes on corporations.) Again, this plan is claimed to be fully paid for over 15 years, with continuing tax increases beyond that time providing net deficit reduction. The American Families Plan, as its name implies, focuses on expenditures and tax cuts for individuals and households, whereas most (but not all) of the American Jobs Plan financed either traditional infrastructure or private research or physical investment. Unless there is a new spirit of bipartisan cooperation, the American Jobs Plan and the American Families Plan will achieve enactment only if combined in a second and final reconciliation bill for the fiscal year 2022 budget enactment cycle, in a process that will surely take months.
Topic:
Infrastructure, Domestic Politics, Tax Systems, Investment, and Deficit
Political Geography:
North America and United States of America

87. Which Tax Policies for Lebanon? Lessons from the Past for a Challenging Future

Author:
Alain Bifani, Karim Daher, Lydia Assouad, and Ishac Diwan
Publication Date:
05-2021
Content Type:
Research Paper
Institution:
Arab Reform Initiative (ARI)
Abstract:
The tax system in Lebanon is unfair and inefficient. As part of rethinking Lebanon’s policies in light of the current crisis, this paper proposes key reforms to make tax incidence more progressive; strengthen tax compliance; and broaden the tax base. It also calls for considering a one-off wealth tax to help resolve the current crisis in a socially fair manner. It posits that the fight for fiscal justice and effectiveness needs to become more central in political debates as a just fiscal system is a requisite of any vision for a “new Lebanon”.
Topic:
Economics, Tax Systems, Economic Inequality, Fiscal Policy, and Wealth
Political Geography:
Middle East and Lebanon

88. Comparing a Clean Electricity Standard and a Carbon Tax

Author:
Peter Marsters, John Larsen, Ben King, Hannah Kolus, and Whitney Herndon
Publication Date:
12-2021
Content Type:
Special Report
Institution:
Center on Global Energy Policy (CGEP), Columbia University
Abstract:
As the United States commits to accelerating decarbonization as part of global efforts to combat climate change, the policies it enacts will govern its chances of success. These international ambitions are balanced against domestic realities: the effect of net-zero greenhouse gas strategies on households and the broader economy. Comparing different policy options against one another in terms of specific outcomes, such as emissions abatement and financial impact on consumers, is a useful exercise for policy makers. Because US congressional proposals have focused on two potential policy routes—an economy-wide price on carbon dioxide and other greenhouse gas emissions, and a sector-by-sector approach that starts with a clean electricity standard—this report models outcomes for these scenarios. A carbon tax and clean electricity standard (CES) are similar policies in some ways. Both have the potential to drive large emissions reductions from the US power sector and beyond. If the CES is designed to be technology-neutral with tradable credits for clean electricity generation, both policies would operate as market-based mechanisms to encourage such generation. They also differ in significant ways, and this report, part of the Carbon Tax Research Initiative at Columbia University’s Center on Global Energy Policy, uses energy system modeling to zero in on those differences to enable policy makers to better understand the advantages and drawbacks of each policy tool. A variety of constructions even within a single tool—particularly a CES—can be employed. What type of generation is eligible for credit in a CES and how much credit each resource receives, for example, are in part products of political and policy trade-offs. For comparison purposes with an economy-wide carbon tax, this report primarily focuses on a single crediting approach that most closely resembles the incentives new and existing electric power generators could receive under a carbon tax (and is similar to the CES included in the Clean Energy Innovation and Deployment Act of 2020). And for CES comparison purposes, the authors construct a carbon tax pathway that closely approximates the annual and cumulative electric power CO2 emissions of the CES. Given the equal emissions-reduction ambitions of the two policies modeled in this report, the greatest trade-offs come down to price increases and revenues. The carbon tax raises consumers’ electricity price more than the CES does, but also raises significant revenues that could be used, among other purposes, to offset increases in consumers’ energy-related bills.
Topic:
Green Technology, Tax Systems, Electricity, Renewable Energy, Carbon Tax, and Carbon Emissions
Political Geography:
North America and United States of America

89. Lebanon’s Political Economy: From Predatory to Self-Devouring

Author:
Lydia Assouad
Publication Date:
01-2021
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
To survive its ongoing financial crisis, Lebanon needs a new economic system that addresses massive income inequality. Paired with political and institutional reform, tax reform can help. Over the past three decades, Lebanon’s ruling class—which comprises intertwined political and business elites—has run the country into the ground. To survive its ongoing accumulation of challenges, including the financial crisis that erupted in October 2019, Lebanon requires a revamped state backed by a new economic model with social justice at its core. Tax reform is central to such an endeavor—and to ensuring that the state has the means both to deliver basic services and to tackle poverty and inequality.
Topic:
Poverty, Inequality, Economic structure, Business, Social Justice, Tax Systems, and Elites
Political Geography:
Middle East and Lebanon

90. Overcoming The Challenge Of Fiscal Transition In Cameroon

Publication Date:
01-2021
Content Type:
Policy Brief
Institution:
The Nkafu Policy Institute
Abstract:
On 16 November 2020, Cameroon’s government published the 2030 National Development 2020- Strategy (SND30), which operationalises the second phase of the emergence vision for 2035. This 10-year plan aims to implement favourable conditions for sustainable economic growth and an accumulation of national wealth through structural changes essential for industrialisation. The strategic objectives to be achieved can be summarised as follows: achieve approximately a double-digit economic growth attain the 25% threshold as the share of manufacturing production in GDP reduce poverty to less than 10% in 2035 consolidate the democratic process and strengthen national unity while respecting the diversity that characterises the country To achieve these clearly defined objectives, public authorities must increase their efforts to encourage local production. In other words, local producers need to be supported and supervised by being rewarded with a package of tax relief measures. The challenge is to promote the “made in Cameroon” and progressively reduce the dependence on manufactured products’ imports.
Topic:
Economics, Economic Growth, Tax Systems, and Fiscal Policy
Political Geography:
Africa and Cameroon