Taxing Africa: coercion, reform and development

• Author: Axel Schimmelpfennig
• Position: Division chief, IMF African Department
• Pages: 58-58

58 FINANCE & DEVELOPMENT | March 2019

BOOK REVIEWS

Collecting Taxes

TAX COLLECTION is on many African policymak-

ers’ minds, and rightly so. e good new s is, the

median sub-Sah aran African countr y has improved

revenue collection from about 14 percent of GDP

in the mid-1990s to more than 18 percent of GDP

in 2016. But revenues still fall short of spending

needs, and public debt has increased across the

continent. Looking ahead , the IMF estimates that

many low-income countries must spend an addi-

tional 14 percent of GDP to achieve the United

Nations’ Sustainable Development Goals by 2030.

At the same time, governments are look ing to move

“beyond aid” to fu nd their own development. Is

there a way to square these goal s?

In their book Taxing Africa, Mick Moore, Wilson

Prichard, and Odd-Helge Fjeldstad give an i llumi-

nating history of ta xation in Africa and describe t he

current state of play. Based on the authors’ broad

experience in advising governments on ta x policy

and revenue administrat ion, they offer ideas to

boost revenue collection, without being prescriptive.

e book starts with a brief h istory of Africa’s tax

system, which has its roots in colonialism. Taxes

were levied mainly on Af ricans and desig ned to

force workers into the cash economy, working for

European farms or m ines. Some taxes are still a sso-

ciated with this period a nd face strong opposition.

After independence, governments tu rned to taxing

agriculture and m ining exports to develop local

industry and redistribute income. In the 1980s

and 1990s, African countries moved to a more

market-based approach and away from main ly

taxi ng exports.

Today, tax systems across t he continent feature

a mix of direct ta xes on personal and corporate

income and indirect ta xes on consumption, such

as a value-added ta x. But the authors note that the

potential for local ta xes is limited by the bribes

citizens must pay to receive basic ser vices. ey

also point to problems in collecting ta xes from rich

and influential citizen s. Last, many countries—

not just in Africa— struggle to collect taxes from

multinational companies t hat use sophisticated

strategies to shift income to tax havens.

So where is the potential to boost ta x collection?

e authors argue that the increasingly sophisti-

cated revenue administr ation authorities in Africa

can help design and implement better ta x systems,

for example, in Rwanda or Uganda. Unfortu nately,

tax authorities are up ag ainst powerful vested inter-

ests that obstruc t reforms. But a political coun-

terweight is emerging. Civil society is star ting to

support revenue mobilization, seeking to improve

fairness, equit y, reciprocity, and accountability. In

this context, the authors note that ma ny govern-

ments are better able to explain t he need for taxes

by pointing to the spending these ta xes pay for.

Taxing Africa is a fascinatin g book that covers

taxation and the ch allenge to increase tax collec-

tion from many angles. e book is w ritten in

nontechnical lang uage and make s stimulating

reading for anyone interested in ta x policy and

revenue administration. e authors’ point that

African lea ders are increasingly looking for A frican

solutions is encouraging. Still, t he policy-minded

reader might appreciate a few more concrete ideas

about what governments can do.

AXEL SCHIMMELPFENNIG, division chief,

IMF African Department

BOOK REVIEWS

Mick Moore, Wilson Prichard,

and Odd-Helge Fjeldstad

Taxing Africa: Coercion,

Reform and Development

Zed Books, London, 2018,

288 pp., $24.95