Big data has been creeping in all aspects of our lives. There is now an unimaginably vast amount of data, and it is rapidly growing by the day. Sadly, there is surprisingly little data – especially accurate data – on how much money governments raise from taxes, and from where they raise the money. This is especially true for Africa.

There however is hope at the end of the tunnel. The International Centre for Tax and Development (ICTD) has just made available a global dataset on government revenues, which is more comprehensive and more accurate than anything else available. At the recent launch in Washington DC, the World Bank, the IMF and the OECD lauded the ICTD’s achievement, and contributed to discussions about how this effort can be maintained and improved upon.

Tax is an issue of fundamental importance for development. To many developed countries, lower taxes may just mean less revenue, but to many African countries, this has a direct impact on millions of lives in terms of health, nutrition, education, security and others.

Sadly, little attention has been given to the need for quality and detailed revenue data and even despite the sparse attempts to improve data; the statistical systems in sub-Saharan Africa still remain weak.

The ICTD Government Revenue Dataset (GRD) was built by compiling, comparing and harmonizing numerous existing datasets from various sources – including the IMF Country Reports – in order to come up with the most accurate and complete data on government revenue.

Although there are various international databases that exist on tax and revenue collection in developing countries – led by the IMF Government Finance Statistics – these datasets are at times seriously flawed, plagued by missing data and simple inaccuracy. The consequences are potentially significant: research findings of questionable validity and policy conclusions driven by inaccurate information.

The ICTD GRD dataset therefore provides a clearer picture of tax trends over time within and across regions, radically improving data coverage as well as the accuracy of the data, most notably by imposing a clear distinction between taxes raised from citizens, and those from natural resources like minerals, oil and gas. The data show that the African continent has been doing a little better in recent years in its tax effort, but there is still a need for much more improvement.

As well as breaking fresh ground around data consistency and transparency, the new dataset sheds new light on our understanding of the relationships between aid and tax collection; natural resource revenue and democracy; and trade taxes and economic growth.

One of the key findings from recent research studies that made use of this dataset, is that there is simply no evidence for the common claim, that receiving development aid makes governments lazy about raising taxes from their own populations. Another is that, despite a great deal of support for the idea, African countries that have reduced their taxes on imports and exports and relied more on VAT, have not experienced more rapid economic growth.

On the surface, producing figures on tax collection trends over time appears relatively straightforward and unproblematic. However, there has been a growing recognition of the stark limitations of the low quality of data on tax and revenue collection in developing countries – so much so that significant skepticism exists about even basic descriptive data related to global and regional tax trends over time.

It is true that governments need good data, and to be effective, such data must not only be accurate but also complete, timely and disaggregated. The ICTD GRD therefore offers a pool of reference that can be comparatively used to engage governments in streamlining revenue sources and increasing tax bases without falling prey to misleading ideas about tax policy that are spread by individuals and companies that want to evade their tax obligations.

Without good and adequate tax data, African governments will not know how to tax more effectively and efficiently or discover new areas to tax. Citizens will also be unable to compare their governments with others, and judge how effective they are at raising revenue.

The High-Level Panel on the Post-2015 Development Agenda called for a “data revolution”: a major initiative to improve the availability and quality of data. By producing this dataset therefore, the ICTD is not only helping make a data revolution in the field of public finance, but also offering the potential for a substantially stronger policy research base, due both to its broader coverage (of developing countries in particular) and the greater consistency and international comparability of the tax data.

The past decade has seen dramatically increased interest in taxation and revenue and a shift away from aid reliance. So far, many countries have made great strides towards this, but without adequate or accurate tax data, this cannot be proved much. This therefore calls for increased investments in better revenue data in Africa – and to realize this – we not only need capacity but also political will.

By Zilper C. Audi

Ms. Audi is the Research Uptake and Communications Manager,

International Centre for Tax and Development (ICTD)