Tax and Governance

There is mounting evidence that increased taxation can spur statebuilding and increase government accountability.  This possibility is critical: without strong links between taxation, statebuilding and accountability, expanded taxation may fail to deliver improved outcomes for taxpayers.  However, such links are far from guaranteed, and depend, among other things, on the types of taxes raised, the nature and equity of tax enforcement, the extent of transparency, the existence of forums for popular engagement and the role of civil society in supporting popular demand making.  The current phase of our research on this theme focuses on identifying concrete strategies for strengthening the links between taxation and good governance at both the local and national levels.

Publications:

How Can Governments of Low-Income Countries Collect More Tax Revenue?
by Mick Moore & Wilson Prichard

Moore and Prichard provide two different kinds of answers to the question of how governments of developing countries can increase tax revenues. First, they discuss seven potential revenue sources that governments of developing countries tend to use less than they should. Mining, tobacco and alcohol, the incomes and wealth of rich people, and property are…

Read more
March 2020
Mining Taxation in Africa: What Recent Evolution in 2018?
by Yannick Bouterige, Céline de Quatrebarbes & Bertrand Laporte

The extractive sector is of primary importance to African states. Of the 54 countries on the continent, 20 are considered by the International Monetary Fund (IMF) to be rich in natural resources. These are countries whose natural resources account for more than 25 per cent of total exports. All are sub-Saharan African countries: seven export…

Read more
Fuel Subsidy Reform and the Social Contract in Nigeria: a Micro-economic Analysis
by Neil McCulloch, Tom Moerenhout & Joonseok Yang

Fuel subsidies in Nigeria are enormous. At last estimate, the state subsidises gasoline to the tune of USD 3.9 billion — almost double the entire health budget. Subsidies exist because the government fixes the price of gasoline for consumers below the international price and uses government resources to pay for the difference. They were first…

Read more
January 2020
Fuel Subsidy Reform and the Social Contract in Nigeria: a Micro-economic Analysis
by Neil McCulloch, Tom Moerenhout & Joonseok Yang

Fuel subsidies in Nigeria are enormous. At last estimate, the state subsidises petrol to the tune of US$3.9 billion – almost double the entire health budget. Such subsidies come at great cost: the opportunity costs of such spending on other development objectives are large; the distribution of resources to the state governments is reduced; the…

Read more
December 2019
Democratisation in Tanzania: No Elections Without Tax Exemptions
by Ole Therkildsen & Dr Ane Karoline Bak

A demand-supply framework has been developed and applied to Tanzania to explore the link between democratisation, economic liberalisation and the use of tax exemptions to fund political parties’ electoral campaigns. In Tanzania, the demand for this type of money has increased since one-party rule was abolished in 1992. This led to reduced state subsidies to…

Read more
October 2019
What are ‘Tax Expenditures’ and How Big are Energy-Related Tax Expenditures?
by Roel Dom & Neil McCulloch

Tax expenditures occur when a government provides a reduction in a tax obligation such that it collects less tax than it would have otherwise collected. Tax expenditures are an integral, though controversial, part of all contemporary tax systems. This policy briefing first summarises the various ways in which tax expenditures can be defined and measured….

Read more
Nigeria: No longer an oil state?
by Sarah Burns & Olly Owen

While there is much speculation about Nigeria’s probably post-oil future, it is in fact already a present reality: In 2015, for the first time since 1971, Nigeria’s public finances had already earned more from non-oil sources than from oil revenues. The transformation to a post-oil future is already in the past.

Read more
June 2019
Democratisation in Tanzania: No Elections Without Tax Exemptions
by Ole Therkildsen & Dr Ane Karoline Bak

A demand-supply framework has been developed and applied to Tanzania to explore the link between democratisation, economic liberalisation and the use of tax exemptions to fund political parties’ electoral campaigns. In Tanzania, the demand for this type of money has increased since one-party rule was abolished in 1992. This led to reduced state subsidies to…

Read more
April 2019
Colonial Legacy, State-building and the Salience of Ethnicity in Sub-Saharan Africa
by Merima Ali, Odd-Helge Fjeldstad, Boqian Jiang & Abdulaziz B Shifa

African colonial history suggests that British colonial rule may have undermined state centralisation due to legacies of ethnic segregation and stronger executive constraints. Using micro-data from anglophone and francophone countries in sub-Saharan Africa, we find that anglophone citizens are less likely to identify themselves in national terms (relative to ethnic terms). To address endogeneity concerns,…

Read more
December 2018
Taxing Government: The Case of the Uganda Revenue Authority’s Public Sector Office
by Henry Saka, Ronald Waiswa & Jalia Kangave

This ICTD Research in Brief is a two-page summary of ICTD Working paper 84 by Henry Saka, Ronald Waiswa and Jalia Kangave. This series is aimed at policy makers, tax administrators, fellow researchers and anyone else who is big on interest and short on time. In the past three decades, revenue authorities in African countries…

Read more

Blogs:

July 2020
by Jason Lakin, Paolo de Renzio & Vanessa van den Boogaard

This piece is co-published with the International Budget Partnership.  Since its onset, governments the world over have responded to the Covid-19 pandemic by ramping up spending and providing tax relief to ailing families and businesses, even in the face of dwindling revenues. This has inevitably led to widened fiscal deficits and ballooning public debts. For…

Read more
June 2020
by Christopher Grigoriou & Gaël Raballand

International money laundering and international illicit financial flows (IFFs) are major problems for poor and rich countries alike, but especially the poor. Both are strongly rooted in fraudulent treatment of imports and exports as they cross international borders. This includes smuggling, misclassification of products to change their valuation, and straight mis-invoicing, i.e. deliberately declaring erroneous…

Read more
June 2020
by Vanessa van den Boogaard

There is growing international attention on tax collection in low-income countries. This attention is only amplifying in light of the increased revenue pressures faced by governments around the world as a result of the Covid-19 pandemic. While governments will be seeking new revenue sources in the coming years, increased revenue is only desirable in so…

Read more

Research Projects:

Current Project
Revenue shortfalls from domestic and trade taxes in the wake of COVID: evidence from Eswatini, Rwanda, Uganda, Sierra Leone and South Africa
Project Researchers: Giulia Mascagni, Giovanni Occhiali, Adrienne Lees & Fabrizio Santoro

Since having been declared a global pandemic in March 2020, Covid-19 has altered the daily life of the vast majority of the world population, with major impacts on its health and livelihood. While Sub-Saharan Africa (SSA) was not amongst the first regions to be hit, cases have been reported in all of its countries since…

Read more
Past Project
The impact of intergovernmental transfers on fiscal behaviors of local governments in Ethiopia
Project Researchers: Dejene Mamo Bekana

This inquiry aims to examine the effect of intergovernmental fiscal transfers on fiscal behaviours of local governments in Ethiopia for the period 1992–2018. The empirical analysis shall follow the systems general methods of moments regression technique. The motivation for using this estimation technique is to provide special focus to the issue of endogeneity by estimating…

Read more
Current Project
Tax Collection and Bureaucrat Accountability: Experimental Evidence from the DRC
Project Researchers: Laura Paler, Augustin Bergeron, Gabriel Tourek & Jonathan L Wiegel

Taxation is thought to stimulate participation and accountable governance. This project examines how tax collection affects local bureaucrat performance in the DRC. We exploit random variation in whether local bureaucrats known as avenue chiefs were responsible for property tax collection (treatment), or whether agents of the tax ministry collected taxes within chief jurisdictions instead (control)….

Read more
Past Project
Mining Taxation – Fondation pour les Etudes et Recherches sur le Développement International (FERDI)
Project Researchers: Celine De Quatrebarbes, FERDI

The Ferdi will update the legal and tax database country by country. It estimates that the average time needed to update a country is four days. However, it goes without saying that countries that have made major tax reforms will require more time than countries whose laws have not changed. For example, Burkina Faso, which…

Read more
Past Project
Energy-related Tax Expenditures in Africa
Project Researchers: Dr. Neil McCulloch & Dr. Roel Dom

This project will explore the scope and size of energy-related tax expenditures in Africa. Tax expenditures (including rate reductions, exemptions and other forms of foregone revenue) can significantly reduce the overall revenue received by African governments. The literature on energy subsidies suggests that energy-related tax expenditures are often among the largest forms of revenue loss….

Project Outputs

Policy Brief
Read more
Past Project
Economic and Political Consequences of Revenue Composition across States in Nigeria
Project Researchers: Oyebola M. Okunogbe

The recent crash in oil prices and subsequent economic crisis has highlighted the grave consequences that are associated with Nigeria’s heavy dependence on oil revenue and its low tax base. While this pattern is well known for the country, there is limited evidence on the state-by-state variation in oil dependence and economic outcomes. This study…

Read more