Tax revenues are relatively low across the continent. In 2018, 30 African countries had an average ratio of taxes to gross domestic product of 16.5% – less than half the ratio in far wealthier member countries of the Organisation for Economic Co-operation and Development (34.3%) (OECD/AUC/ATAF, 2020).
In addition to capacity limitations of government tax agencies, low tax revenues can be related to macroeconomic factors such as large agricultural and informal sectors, which are typically hard to tax (Di John, 2006; Mansour & Keen, 2009; Coulibaly & Gandhi, 2018; Moore, Prichard, & Fjeldstad, 2018). One current debate concerns how to tax highly digitalized businesses – which operate in African countries without necessarily having an easily taxable physical presence – in a way that is fair and doesn’t impede the growth of start-up companies (African Tax Administration Forum, 2020).
But low tax revenues can also reflect micro-level factors such as citizens’ willingness to pay taxes (“tax morale”), their knowledge about what they owe and what their taxes are used for, and their perceptions of corruption in the tax administration (OECD, 2019). If citizens regard paying taxes as a fiscal exchange or contractual relationship (Moore, 2004), such perceptions can affect the legitimacy of taxation as a whole (D’Arcy, 2011).
Afrobarometer survey data collected in 18 African countries in 2019/2020 show that a majority of Africans endorse their government’s right to collect taxes. But this support for taxation has weakened over the past decade while perceptions that people often avoid paying their taxes have increased sharply.
Moreover, many Africans question the fairness of their country’s tax burden, and only half think their government is using tax revenues for the well-being of its citizens.
While a majority would pay higher taxes to support young people and national development, most say they find it difficult to get information about tax requirements and uses, and many see tax officials as corrupt and untrustworthy. Such perceptions may play a role in how willingly citizens support – and comply with – their government’s tax administration.