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Tax effort performance in sub-Sahara Africa and the role of colonialism

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  • Feger, Thuto
  • Asafu-Adjaye, John

Abstract

Governments in sub-Sahara Africa (SSA) have tended to rely unduly on foreign aid and debt financing for the provision of public goods such as health, basic education and infrastructure. Domestic tax revenue could play a significant role in funding such expenditures. However, to date tax revenue collection in SSA has only averaged about 15% of GDP. In this paper we employ cluster analysis to enhance our understanding in the variations in tax effort performance amongst SSA countries. Past studies of tax effort performance in SSA have resorted to economic events or factors to explain the tax effort performance. We argue here that it is necessary to consider historical events to provide a fuller explanation. We provide evidence to show that the different colonial policies pursued in SSA have had a long lasting and profound effect on the countries' tax revenue performance.

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  • Feger, Thuto & Asafu-Adjaye, John, 2014. "Tax effort performance in sub-Sahara Africa and the role of colonialism," Economic Modelling, Elsevier, vol. 38(C), pages 163-174.
    • Handle: RePEc:eee:ecmode:v:38:y:2014:i:c:p:163-174
    DOI: 10.1016/j.econmod.2013.12.020
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    3. Andersson, Jens & Lazuka, Volha, 2019. "Long-term drivers of taxation in francophone West Africa 1893–2010," World Development, Elsevier, vol. 114(C), pages 294-313.
    4. Hassen, Azime A., 2016. "Agricultural taxation and economic growth in Ethiopia," 2016 Fifth International Conference, September 23-26, 2016, Addis Ababa, Ethiopia 246395, African Association of Agricultural Economists (AAAE).
    5. Yoshino, Naoyuki & Taghizadeh-Hesary, Farhad & Nili, Farhad, 2015. "Estimating Dual Deposit Insurance Premium Rates and Forecasting Non-performing Loans: Two New Models," ADBI Working Papers 510, Asian Development Bank Institute.
    6. Weneyam Hippolyte Balima & Jean-Louis Combes & Alexandru Minea, 2016. "Bond Markets Initiation and Tax Revenue Mobilization in Developing Countries," Southern Economic Journal, Southern Economic Association, vol. 83(2), pages 550-572, October.
    7. Naoyuki Yoshino & Farhad Taghizadeh-Hesary, 2014. "Analytical framework on credit risks for financing small and medium-sized enterprises in Asia," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 21(2), pages 1-21, December.
    8. Naoyuki Yoshino & Farhad Taghizadeh-Hesary & Farhad Nili, 2019. "Fair premium rate of the deposit insurance system based on banks’ creditworthiness," Studies in Economics and Finance, Emerald Group Publishing Limited, vol. 36(1), pages 8-31, May.
    9. Emilie Caldeira & Alou Adessé Dama & Ali Compaoré & Mario Mansour & Grégoire Rota-Graziosi, 2020. "Tax effort in Sub-Saharan African countries : evidence from a new dataset," Working Papers hal-02543162, HAL.
    10. Compaoré, Ali, 2022. "Access-for-all to financial services: Non-resources tax revenue-harnessing opportunities in developing countries," The Quarterly Review of Economics and Finance, Elsevier, vol. 85(C), pages 236-245.
    11. Yoshino, Naoyuki & Taghizadeh-Hesary, Farhad, 2014. "Hometown Investment Trust Funds: An Analysis of Credit Risk," ADBI Working Papers 505, Asian Development Bank Institute.
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    14. Galvis Ciro, Juan Camilo & Ferreira de Mendonça, Helder, 2016. "Inflation targeting and tax effort: Evidence from Colombia," MPRA Paper 90544, University Library of Munich, Germany, revised 14 Dec 2018.

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