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:

January 2021
Tax Certainty? The Private Rulings Regime in Uganda in Comparative Perspective
by Samuel Kahima, Solomon Rukundo & Victor Phillip Makmot

Taxpayers sometimes engage in complex transactions with uncertain tax treatment, such as mergers, acquisitions, demergers and spin-offs. With the rise of global value chains and proliferation of multinational corporations, these transactions increasingly involve transnational financial arrangements and cross-border dealings, making tax treatment even more uncertain. If improperly structured, such transactions could have costly tax consequences….

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Tax Amnesties in Africa: An Analysis of the Voluntary Disclosure Programme in Uganda
by Solomon Rukundo

Tax amnesties have taken centre stage as a compliance tool in recent years. The OECD estimates that since 2009 tax amnesties in 40 jurisdictions have resulted in the collection of an additional €102 billion in tax revenue. A number of African countries have introduced tax amnesties in the last decade, including Nigeria, Namibia, South Africa…

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December 2020
What is Wrong with African Tax Administration?
by Mick Moore

National tax administrations in sub-Saharan Africa have undergone considerable reform in recent decades. In several respects, they are, on average, more reformed and more efficient than tax administrations in other low-income regions. Many have made major organisational changes, responding effectively to a number of major challenges. This includes the introduction of VAT, a rather complex…

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December 2020
Strengthening Tax-Accountability Links: Fiscal Transparency and Taxpayer Engagement in Ghana and Sierra Leone
by Vanessa van den Boogaard, Wilson Prichard, Rachel Beach & Fariya Mohiuddin

Taxation is high on the international development agenda, largely due to growing evidence that it can not only provide sustainable development funding, but also contribute to expanded responsiveness and accountability in government. This is because: (i) when forced to pay taxes citizens are more likely to feel ownership of government revenues, and demand benefits in…

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The Impact of Intergovernmental Transfers on Fiscal Behaviour of Local Governments in Ethiopia
by Dejene Mamo Bekana

This paper examines the effect of intergovernmental fiscal transfers on the fiscal behaviour of local governments in Ethiopia for the period 2004-2018. The empirical findings suggest that central government grants bolster state-level employment and expenditure. However, grants from the central government to states do not crowd out state-level revenue collection. Hence, this paper argues that…

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November 2020
Strengthening Tax-Accountability Links: Fiscal Transparency and Taxpayer Engagement in Ghana and Sierra Leone
by Vanessa van den Boogaard, Wilson Prichard, Rachel Beach & Fariya Mohiuddin

There is increasingly strong evidence that taxation can contribute to expanded government responsiveness and accountability. However, such positive connections are not guaranteed. Rather, they are shaped by the political and economic context and specific policies adopted by governments and civil society actors. Without an environment that enables tax bargaining, there is a risk that taxation…

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September 2020
Governance and Building Back Better
by Shandana Khan Mohmand

The pandemic is in many ways a crisis of governance. Its magnitude and mitigation are determined by the nature of policy responses and crisis management by leaders and governments, and existing socioeconomic inequality has led to a disproportionate impact on some groups. The pandemic has created a set of unique challenges that underscore the need…

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August 2020
Building a Social Contract? Understanding Tax Morale in Nigeria
by Neil McCulloch, Tom Moerenhout & Joonseok Yang

An important part of every country’s development process is the building of a social contract in which citizens pay tax and, in turn, receive public goods and services. Evidence suggests that this is associated with the establishment of a norm of tax payment and a belief that non-payment is wrong. We exploit a new, nationally…

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

In this chapter, 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,…

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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…

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Blogs:

December 2020
by Laura Wilson & Mamadou Gueye

It is widely recognised that “business as usual” will not close the estimated financing gap of USD 2.5 trillion that is needed annually to achieve the Sustainable Development Goals (SDGs) by 2030. United by this realisation, the members of the multi-stakeholder-partnership Addis Tax Initiative (ATI) recently presented the ATI Declaration 2025 to renew political buy-in…

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November 2020
by Fariya Mohiuddin & Ruvimbo Chidziva

During the summer of 2020, the International Budget Partnership (IBP) and the International Centre for Tax and Development (ICTD) worked collaboratively to conduct a broad scan of civil society organisations (CSOs) working in the taxation space with a specific interest in domestic taxation. Our objective was to create a comprehensive picture of the emerging field,…

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September 2020
by Giulia Mascagni

Despite being recognised as a critical aspect of tax compliance, taxpayer knowledge is a very under-explored topic. Using evidence from Rwanda and Eswatini, Giulia Mascagni explores why taxpayer education matters, whether it is effective, and how research can inform governments’ taxpayer education programmes. Across Africa, many taxpayers have a shockingly poor understanding of the tax…

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Research Projects:

Past 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…

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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…

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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)….

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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…

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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
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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…

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