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Diamond Smuggling and Taxation in Sub-Saharan Africa

Author

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  • Mr. Matthias Vocke
  • Nienke Oomes

Abstract

This paper provides an overview of diamond mining in sub-Saharan African countries, and explores the reasons for substantial differences in their tax rates and fiscal revenues from the sector, which mainly arise from differences in the incentives for smuggling. In a theoretical model, we show that optimal diamond tax rates increase with the degree of competition among diamond buyers, as well as with the corporate share of diamond production, which is confirmed by the data. We then discuss policies to increase revenue, including by enhancing mining productivity, stimulating the exploration of new areas, reducing barriers to entry, and attracting investment into value-adding downstream operations.

Suggested Citation

  • Mr. Matthias Vocke & Nienke Oomes, 2003. "Diamond Smuggling and Taxation in Sub-Saharan Africa," IMF Working Papers 2003/167, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2003/167
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    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=16812
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    Citations

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    Cited by:

    1. International Monetary Fund, 2005. "Democratic Republic of the Congo: Selected Issues and Statistical Appendix," IMF Staff Country Reports 2005/373, International Monetary Fund.
    2. Hilson, Gavin & Hilson, Abigail & Maconachie, Roy, 2018. "Opportunity or necessity? Conceptualizing entrepreneurship at African small-scale mines," Technological Forecasting and Social Change, Elsevier, vol. 131(C), pages 286-302.
    3. Ibrahim A. Onour, 2018. "Do Political Internal Unrest and Smuggling of Precious Metals are Associated? Evidence from a Conflict Country," International Journal of World Policy and Development Studies, Academic Research Publishing Group, vol. 4(1), pages 1-5, 01-2018.
    4. Debora L. Spar, 2006. "Markets: Continuity and Change in the International Diamond Market," Journal of Economic Perspectives, American Economic Association, vol. 20(3), pages 195-208, Summer.

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