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The sources of VAT gaps in WAEMU: case studies on Benin and Burkina Faso

Author

Listed:
  • Romain Houssa

    (CRED, University of Namur)

  • Kelbesa Megersa

    (CRED, University of Namur)

  • Roukiatou Nikiema

    (Ouaga II University)

Abstract

This paper examines the performance of the Value-Added Tax (VAT) in Benin and Burkina Faso since its introduction in the early 1990s. Both countries are witnessing a gradual rise in tax revenue over the study period. The paper also delivers a sectoral breakdown of inefficiencies in VAT-revenue collection in the two countries. We additionally decompose VAT gap in to ‘compliance gap’ and the ‘policy gap’. We find that the sectors responsible for ‘compliance gap’ are largely similar in the two countries. The gaps in VAT collection represent a considerable loss in potential tax revenue. Addressing them will support the ‘Domestic Resource Mobilization’ (DRM) efforts of the two countries.

Suggested Citation

  • Romain Houssa & Kelbesa Megersa & Roukiatou Nikiema, 2017. "The sources of VAT gaps in WAEMU: case studies on Benin and Burkina Faso," BeFinD Working Papers 0122, University of Namur, Department of Economics.
    • Handle: RePEc:nam:befdwp:0122
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    File URL: http://www.befind.be/Documents/WPs/wp22
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    References listed on IDEAS

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    3. Michael Keen, 2013. "The Anatomy of the Vat," National Tax Journal, National Tax Association;National Tax Journal, vol. 66(2), pages 423-446, June.
    4. International Monetary Fund, 1996. "Benin: Recent Economic Developments," IMF Staff Country Reports 1996/102, International Monetary Fund.
    5. Mattéo Godin & Romain Houssa & Kelbesa Megersa, 2017. "The Performance of VAT in DGD-partner countries," BeFinD Working Papers 0116, University of Namur, Department of Economics.
    6. Maïmouna DIAKITE & Jean-François BRUN & Souleymane DIARRA & Nasser ARY TANIMOUNE, 2017. "The effects of tax coordination on the tax revenue mobilization in West African Economic and Monetary Union (WAEMU)," Working Papers 201712, CERDI.
    7. International Monetary Fund, 1996. "Bahamas: Recent Economic Developments," IMF Staff Country Reports 1996/126, International Monetary Fund.
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    10. Keen, Michael & Smith, Stephen, 2006. "VAT Fraud and Evasion: What Do We Know and What Can Be Done?," National Tax Journal, National Tax Association;National Tax Journal, vol. 59(4), pages 861-887, December.
    11. Jorge Martinez-Vazquez & Richard M. Bird, 2011. "Value-Added Tax: Onward and Upward?," Chapters, in: Emilio Albi & Jorge Martinez-Vazquez (ed.), The Elgar Guide to Tax Systems, chapter 6, Edward Elgar Publishing.
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    Cited by:

    1. Adisa Bazak Lungu & Charles Muwe Mungule Phd, 2023. "An Analysis of the Value Added Tax (Vat) Gap in Zambia," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(4), pages 752-762, April.
    2. Alain Babatounde & Bart Capeau & Romain Houssa, 2023. "Welfare effects of indirect tax policies in West Africa," DeFiPP Working Papers 2301, University of Namur, Development Finance and Public Policies.
    3. Romain Houssa & Kelbesa Megersa, 2020. "Capacity Support for Domestic Revenue Mobilization - The case of Belgian development cooperation and partner countries," BeFinD Working Papers 0131, University of Namur, Department of Economics.

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    More about this item

    Keywords

    Value-Added Tax (VAT); Domestic Resources Mobilization (DRM); Tax Reform; Institutional Quality; Economic development;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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