Taxing a Developing Africa: Citizens' Views

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Taxing a Developing Africa:

Citizens' Views

Rose Aiko & Carolyn Logan

Best Western Plus Hotel Conference Hall, 5th March 2014

REPOA – Policy Research for Development


Afrobarometer Core Objectives

• Expand the survey database in Africa

• Enhance visibility of Afrobarometer findings among African policy actors

• Build African capacity for survey research and analysis

• Strengthen and indigenize network management

2


Country Coverage: 1999-2013

Round 1, 1999-2001, 12 countries

• Southern Africa: Botswana, Lesotho, Malawi, Namibia, South Africa,

Zambia, Zimbabwe

• West Africa: Ghana, Mali, Nigeria

• East Africa: Tanzania, Uganda


• Cape Verde, Kenya, Mozambique,

Senegal


• Benin, Madagascar


• Burkina Faso, Liberia


• Algeria, Burundi, Cameroon, Cote d’Ivoire, Egypt, Ethiopia, Guinea, Mauritius, Morocco, Niger, Togo, Tunisia, Sierra Leone, Sudan, Swaziland

3


Round 5 “Global Release”

7 events in 7 cities (over 7+ months…)

Lived Poverty and Economy (Johannesburg)

Freedom of Speech and Globalizing Communications

(Nairobi)

Corruption (Dakar)

Governance; Extractive Resources (Accra)

Taxation (Lagos, today)

Gender (Tunis, forthcoming)

Democracy (Bamako, forthcoming)

4

• Background

• Taxes as development resources

• The legitimacy of taxation

• Tax compliance and threat of

enforcement

• Transparency & integrity of tax

authorities

• Corruption and compliance

• Conclusion

In this presentation


1. Background

• Mobilization of resources through taxation is a top priority on

Africa's development agenda.

• Revenue generation capacity (ability of tax authorities to

generate revenue through taxation) improving, but unable to

match public sector spending needs.

• For many countries tax—spending gap is high, leading to

reliance on unreliable and often conditionality attached

foreign aid.

• Comparison of revenue yield in Africa with OECD, one of

Africa’s largest benefactors, suggest scope exists for more

revenue generation.

• What are Africans opinions and attitudes towards taxation?


2. Taxes as development resources

• Broad majorities see taxes as important to their

countries' advancement;

• Substantial variation across countries

• Support for taxation is a majority position in all regions, but is is much higher in West Africa;

• A majority (52%) across Africa, albeit slim, is even willing to see their taxes increase, as long as this would result in more services provided by governments

Support for taxation for development | 29 countries, 2011-2013

84

%

84

%

82

%

81

%

81

%

79

%

78

%

77

%

77

%

73

%

72

%

69

%

69

%

68

%

68

%

67

%

66

%

64

%

64

%

63

%

61

%

58

%

57

%

56

%

55

%

53

%

51

%

50

%

45

%

32

%

0%

20%

40%

60%

80%

100% G

ha

na

Co

te d

’Iv

oire

Ca

me

roo

n

Se

ne

ga

l

Lib

eria

Ma

li

Nig

er

Sie

rra

Le

on

e

Sw

azi

lan

d

Ke

nya

Mo

zam

biq

ue

Be

nin

Ca

pe

Ve

rde

Bu

rkin

a F

aso

So

uth

Afr

ica

Ma

uritiu

s

Av

era

ge

Ma

da

ga

sca

r

Nig

eria

Za

mb

ia

Tog

o

Zim

ba

bw

e

Bo

tsw

an

a

Bu

run

di

Tan

zan

ia

Na

mib

ia

Ug

an

da

Gu

ine

a

Ma

law

i

Leso

tho

Must pay tax No need to tax

Q: Which of the following statements is closest to your view:

1: Citizens must pay their taxes to the government in order for our country to develop.

2: The government can find enough resources for development from other sources without having to tax the people.’

Support for taxation for development, by region |29

countries |2011-2013

59% 60%

73% 66%

0%

20%

40%

60%

80%

East Africa Southern

Africa

West Africa Average

Support for taxation is a majority position in all regions, but is substantially

higher in West Africa than East or Southern Africa.

70% 68%

65% 65%

64% 63%

60% 59% 58% 57% 56% 56%

54% 53% 52% 52% 51% 51%

49% 49%

48% 48%

46% 45%

41% 37%

35% 33% 33%

31%

23% 25% 31% 26% 27% 32% 21% 35% 35% 37% 27% 25% 31% 24% 37% 35% 43% 31% 37% 33% 20% 29% 45% 41% 48% 44% 60% 58% 46% 51%

0% 20% 40% 60% 80% 100%

Senegal Niger

Sierra Leone Cote d’Ivoire

Tanzania Liberia

Cameroon Mali

Ghana Benin Togo

Swaziland Mauritius

Mozambique Guinea

Average Nigeria

Burkina Faso South Africa

Kenya Cape Verde Madagascar

Namibia Zambia

Uganda Lesotho Burundi Malawi

Botswana Zimbabwe

Higher tax, more services Neither / don't know

Lower tax, fewer services

Tax-for-service

trade-off

|29 countries

|2011-2013

‘Which of the following

statements is closest to

your view: Statement 1:

It is better to pay higher

taxes, if it means that

there will be more

services provided by

government. Statement

2: It is better to pay

lower taxes, even if it

means there will be

fewer services provided

by government.’


3. The legitimacy of taxation

• There is significant support , majority in every country, for the role of revenue authorities in collecting taxes from people.

• Across 16 countries tracked for the last decade, support for the role of tax authorities has grown steadily, from 64% in 2002 to 71% circa 2012

• Majority (84%) reject deception about paying tax obligations, though not all fully condemn it.

• 35% say it is wrong but understandable

• Just under half (49%) deem it wrong and punishable

Authorities' rights to tax citizens |high & low countries | 2011-2013

Q: ‘Please tell me whether you disagree or agree with the following statement: The tax authorities always have the right to make people pay taxes.’ (% ‘agree’ or ‘strongly agree’)

90

%

84

%

82

%

82

%

82

%

81

%

70

%

59

%

59

%

58

%

58

%

52

%

52

%

0%

20%

40%

60%

80%

100%

Gh

an

a

Nig

er

Sie

rra

Le

on

e

Sw

azi

lan

d

Lib

eria

Bo

tsw

an

a

Av

era

ge

Be

nin

Gu

ine

a

Bu

rkin

a F

aso

Leso

tho

Ma

da

ga

sca

r

Tog

o

-Tax departments enjoy the highest levels of legitimacy in Ghana (90%)

and Niger (84%); lowest in Madagascar and Togo (52% each).

Increasing endorsement of tax authority legitimacy |16

countries | 2002-2012

-Across 16 countries tracked for the last decade, support for the role of

tax authorities has grown steadily, from 64% in 2002 to 71% circa 2012

64% 64% 67%

71%

50%

60%

70%

80%

2002 2005 2008 2012

Q: Please tell me

whether you think the

following action is not

wrong at all, wrong

but understandable,

or wrong and

punishable: not

paying the taxes they

owe on their income.’

Tolerance for tax

avoidance | 29 countries, 2011-2013

73% 65%

63% 63% 62%

61% 58%

57% 56%

55% 53% 53% 52% 52% 51% 51%

49% 49%

45% 42% 41% 40% 40%

37% 37% 36% 35%

32% 31%

28%

23% 30%

29% 29%

19% 24%

36% 25%

38% 31%

35% 38%

43% 36%

28% 32% 35% 37%

33% 45% 46%

44% 47%

19% 49%

33% 38%

46% 33%

42%

0% 20% 40% 60% 80% 100%

Mauritius Mali

Ghana Cameroon

Burundi Niger

Swaziland Liberia

Senegal Botswana

Cote d’Ivoire Sierra Leone

Benin South Africa

Guinea Kenya

Average Namibia Tanzania

Togo Zambia

Burkina Faso Nigeria

Lesotho Zimbabwe

Madagascar Cape Verde

Uganda Mozambique

Malawi

Wrong and punishable Wrong but understandable

-Majority reject deception about

paying tax obligations,


4. Tax compliance and

threat of enforcemen

• A majority (58%) believes compliance is widespread

• A sizeable minority is less convinced: nearly 1 in 3 (29%) say people ‘often’ or “always” avoid paying taxes they owe.

• Governments seem to have, nonetheless, established a credible threat of enforcement:

– more than two thirds (69%) believe that it is ‘difficult’ or ‘very difficult’ to ‘avoid paying income or property taxes that you owe to government’


Perceived non-compliance with tax

requirements | 29 countries, 2011-2013

1

2%

13

%

14

%

15

%

16

%

19

%

21

%

21

%

21

%

22

%

23

%

24

%

25

%

26

%

28

%

29

%

29

%

29

%

30

%

30

%

34

%

36

%

37

%

37

%

38

%

42

%

44

%

45

% 5

3%

56

%

0%

20%

40%

60% N

am

ibia

B

ots

w…

N

ige

r Za

mb

ia

Bu

run

di

Zim

ba

…

Ma

law

i M

au

ritiu

s Sw

azi

l…

Ug

an

da

M

oza

…

Leso

tho

M

ad

a…

K

en

ya

Ta

nza

nia

Li

be

ria

A

ve

rag

e

Ma

li G

uin

ea

G

ha

na

N

ige

ria

So

uth

…

Tog

o

Be

nin

Se

ne

ga

l B

urk

in…

C

ap

e …

C

am

er…

Sie

rra

…

Co

te …

Q: ‘In your opinion, how often, in this country: do people avoid paying

the taxes that they owe the government?’

(% saying ‘often’ or ‘always’)


Difficulty of avoiding

taxes | 29 countries,

2011-2013

69% 13%

0% 20% 40% 60% 80% 100%

Burundi Mali

Mauritius Togo

Tanzania Uganda

Kenya Zimbabwe

Guinea Nigeria

Burkina Faso Niger

Malawi Zambia

Cape Verde Benin

Average Sierra Leone

Liberia Madagascar Cote d’Ivoire

Senegal Ghana

Mozambique Swaziland

Cameroon South Africa

Botswana Namibia Lesotho

Difficult / Very difficult Easy / Very easy

Don't owe taxes Don't know

Q: ‘Based on your

experience, how easy or

difficult is it to do each of

the following: To avoid

paying the income or

property taxes that you owe

to government.’


5. Transparency and

integrity of tax officials • Tax systems are largely perceived to be opaque by

citizens – Six of ten (62%) indicate it is ‘difficult’ or ‘very difficult’ to get

information about the taxes and fees they are required to pay

• It is even more difficult to know how the monies are spent – 76% say it is difficult or very difficult to find out how the money is

used

• Information access is more challenging in Eastern Africa; relatively easier in Southern Africa

Information about taxes and fees to pay is difficult to obtain

83

%

77

%

75

%

74

%

73

%

73

%

72

%

71

%

62

%

47

%

45

%

43

%

37

%

0%

20%

40%

60%

80%

100% B

uru

nd

i

Gu

ine

a

Ma

law

i

Tog

o

Ke

nya

Ug

an

da

Tan

zan

ia

Sie

rra

Le

on

e

Av

era

ge

So

uth

Afr

ica

Co

te …

Bo

tsw

an

a

Ma

uritiu

s

Q: ‘Based on your experience, how easy or difficult is it to do each of the following: To find out what taxes and fees you are supposed to pay to the government.’ (% ‘difficult’ or ‘very difficult’)

Information about how governments spend tax monies is even more

difficult to access

89% 86% 85% 85% 84% 76%

63% 61% 59% 57%

0%

20%

40%

60%

80%

100% B

uru

nd

i

Tan

zan

ia

Gu

ine

a

Ke

nya

Ug

an

da

Av

era

ge

Na

mib

ia

Leso

tho

So

uth

Afr

ica

Bo

tsw

an

a

Q: ‘Based on your experience, how easy or difficult is it to do each of the

following: To find out how government uses the revenues from people’s taxes

and fees.’ (% ‘difficult’ or ‘very difficult’)


6. Corruption and tax

compliance • Clear reservations as regards incorruptibility of tax

officials.

– One in three citizens (35%) says ‘most’ or ‘all’ tax officials are corrupt, and another 39% reports that at least ‘some’ of them are.

– Across the 16 countries tracked since 2005, those reporting that at least ‘some of them’ are corrupt has substantially increased (from 63% in 2005 to 72% in 2012).

• Corruption increases tolerance for non-compliance with tax obligations


Perceived corruption

among tax authorities |

29 countries, 2011-2013

0% 20% 40% 60% 80% 100%

Cameroon Nigeria

Sierra Leone Benin

Liberia Togo

Zimbabwe Burundi

Uganda Mali

Ghana Kenya

Tanzania Guinea

Average Burkina Faso

Cote d’Ivoire Mozambique

Namibia Malawi

Niger Swaziland

Madagascar South Africa

Zambia Senegal Lesotho

Botswana Cape Verde

Mauritius

Most/All Some None Don't know

-Nigeria and

Cameroon face

largest credibility gap;

Mauritius and Cape

Verde the least

Q: ‘How many of the following people do you think are involved in corruption, or haven’t you heard enough about them to say: tax officials, like Ministry of Finance officials

or local government tax collectors?’


Changes in perceptions of corruption

among tax authorities|16 countries, 2005-

2012

12% 11% 11%

30% 35%

40%

33% 33% 32%

24% 21%

17%

0%

10%

20%

30%

40%

50%

Circa 2005 Circa 2008 Circa 2012

None of them Some of them Most / All of them Don't know

13% 9% 10%

14%

29%

36% 38% 37%

55% 52% 49%

47%

0%

10%

20%

30%

40%

50%

60%

None Some of

them

Most of

them

All of them

Extent of perceived corruption among tax officials

Not wrong at all

Wrong but

understandable Wrong and punishable

Tolerance for tax

avoidance

Perceived corruption and tolerance for taxation

avoidance

Among those who perceive that all tax officials are corrupt, tolerance for

non-payment of taxes increases substantially


Conclusions

• Reform of domestic taxation systems will

remain a key priority in foreseeable future.

• Africans are largely on board:

– people affirm that national development should

be built on a foundation of domestic taxation.

– tax authorities enjoy widespread – and growing –

legitimacy among citizens

– significant numbers also affirm the importance of

compliance with tax obligations


Conclusions

• Reform of domestic taxation systems will remain a key priority in foreseeable future.

• Africans are largely on board

• But Transparency of tax authorities and

accountability of public finance systems remain public concerns.

• Integrity of tax authorities also a major challenge;

undermines compliance.

• Improving access to tax and government spending

information, while reducing corruption will help

encourage voluntary compliance; enhance government revenue generation.


THANK YOU

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Taxing a Developing Africa: Citizens' Views