Tax collection in most African countries low – Report
A report, yet to be published, titled the ‘2015 African Capacity Report’ says despite improvements in domestic revenue collection in most African countries, tax collection remains low.
The Africa Capacity Building Foundation (ACBF), the organization that did the survey, in a press release copied to ghanabusinessnews.com says, the report finds that despite significant improvements in revenue collection over the last decade from 2006 to 2015, the effective mobilization of domestic resources in African countries faces significant challenges, chief among them high capacity constraints and low tax collection efforts.
The report states that between 45 per cent to 50 per cent of the 45 countries surveyed have very high needs in building institutional and human capacity in almost all areas critical to ensuring effective and sustainable domestic resource mobilization (DRM): fighting illicit financial flows, revenue collection, fiscal sustainability, strengthening of the financial sector, fight against corruption and social security and safety nets.
“In 27 of the 45 countries covered, DRM between 1996 and 2010 remains low. This is due a very narrow tax base; tax erosion due to high levels of capital flight, weak capacity within the tax administration and the inability to deal with illicit financial flows,” the report says.
It notes that preliminary findings also show that the level of taxpayers’ trust in the tax system is low in 89 per cent of the countries surveyed while the high proportion of fiscal exemptions extended to investors further contributes to tax erosion – 97 per cent of the countries surveyed have tax exemptions dedicated to investors.
The report among other things indicates that the surveyed African countries have also failed to see value of adhering to platforms like the African Tax Administration Forum – the first platform for exchange between tax authorities, launched in 2009 or the Collaborative African Budget Reform Initiatives. It states that 72 per cent of countries surveyed are non- members of the Forum.
By Emmanuel K. Dogbevi