- On average across 34 countries, six in 10 Africans (61%) say their governments have the right to make people pay taxes. But the perceived legitimacy of taxation has declined by 10 percentage points over the past decade, and solid majorities in some countries dispute the government’s right to collect taxes.
- Only about one-third of Africans say their country’s tax rates are “about right.” Pluralities think that ordinary people pay too much and the rich pay too little in taxes.
- Half (50%) of Africans say they would be willing to pay higher taxes in exchange for more government services, but almost as many (42%) would prefer lower taxes with fewer services. People who approve of their government’s performance in providing services are more likely to endorse higher taxes with more services.
- More than half (52%) of Africans say that people in their country “often” or “always” avoid paying their taxes. Countries vary widely on this indicator, from 16% in Ethiopia to 80% in Liberia. Perceived tax avoidance has skyrocketed over the past decade, increasing in all 30 countries for which over-time data are available.
- Solid majorities say it is difficult to find out which taxes or fees they are supposed to pay (61%) and how their government uses its tax revenues (77%). Only half (51%) of respondents say their government generally uses tax revenues for the well-being of citizens.
- On average across 34 countries, more than one in three respondents (35%) believe that “most” or “all” tax officials are corrupt. Only four in 10 Africans (41%) say they trust their tax office “somewhat” or “a lot.”
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.