Increasing Tax-to-GDP Ratios of Sub Sahara-African Countries: Lessons From Advanced Economies

Abstract

This study has the objective of identifying the challenges militating against the growth of tax-to-GDP ratiosof sub-Sahara African countries,their causes and remedies. Nigeria is used as a case studywhile the content analysis research approach is adopted.Reports from some apex international monetaryauthorities indicate that, while a typical advanced country has a tax-to-GDP ratio of around 40% , manysub-Sahara African countries maintain tax-to-GDP ratios that fall below the 15% threshold..Though the tax structures in many of thosecountries have improved in recent times, growth in their domestic revenue mobilization has been generally sluggish.Many of them persistently experience significanttax-gaps,overwhelming incerase in external debt-to-GDP ratio and budget deficits -a clear manifestationthat their tax policiesrequire serious overhauling. The paper reveals that the low-rated countries are characterized by Gulf countries while the high rated ones are dominated by European countries and that, even as one the largest economies in Africa, Nigeria is one of the sub-Sahara African countries having the lowest tax-to-GDP ratios. It suggests that, in line with best practices, thesub-Sahara African countries should put in place clear political mandates to tackle low levels of tax payment and a simpler tax system with a restricted number of rates and exemptions.

Tobacco excise tax policy in Indonesia: who does reap the benefits?

“…Second, there are unique justifications in excise levy, which are: (i) controlling the consumption of a certain type of goods (Schafferer et al, 2018;Shang et al, 2019;Bridge et al, 2020); (ii) internalizing negative externality (Alvarez, 2019;di Bella et al, 2019;Quiggin & Wang, 2019;Nwadialor & Agbo, 2020;(iii) increasing the efficiency of resources (Akhmetshin et al, 2019;Becker et al, 2019;Sugiyama & Koonsed, 2019); (iv) creating jobs (Friske & Cockrell, 2019, Kitchen et al, 2019Nguyen et al, 2020); and (v) increasing government income; among others (Ross et al, 2017;Alsukait et al, 2019;Luong & Vu, 2020). Those reasons make excise tax different with any other tax, since normally government income is used as the main justification in every tax levy.…”