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Tax effort performance in sub-Sahara Africa and the role of colonialism

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  • Feger, Thuto
  • Asafu-Adjaye, John

Abstract

Governments in sub-Sahara Africa (SSA) have tended to rely unduly on foreign aid and debt financing for the provision of public goods such as health, basic education and infrastructure. Domestic tax revenue could play a significant role in funding such expenditures. However, to date tax revenue collection in SSA has only averaged about 15% of GDP. In this paper we employ cluster analysis to enhance our understanding in the variations in tax effort performance amongst SSA countries. Past studies of tax effort performance in SSA have resorted to economic events or factors to explain the tax effort performance. We argue here that it is necessary to consider historical events to provide a fuller explanation. We provide evidence to show that the different colonial policies pursued in SSA have had a long lasting and profound effect on the countries' tax revenue performance.

Suggested Citation

  • Feger, Thuto & Asafu-Adjaye, John, 2014. "Tax effort performance in sub-Sahara Africa and the role of colonialism," Economic Modelling, Elsevier, vol. 38(C), pages 163-174.
  • Handle: RePEc:eee:ecmode:v:38:y:2014:i:c:p:163-174 DOI: 10.1016/j.econmod.2013.12.020
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    1. Yoshino, Naoyuki & Taghizadeh-Hesary, Farhad & Charoensivakorn, Phadet & Niraula, Baburam, 2015. "SME Credit Risk Analysis Using Bank Lending Data: An Analysis of Thai SMEs," ADBI Working Papers 536, Asian Development Bank Institute.
    2. Naoyuki Yoshino & Farhad Taghizadeh-Hesary, 2014. "Analytical framework on credit risks for financing small and medium-sized enterprises in Asia," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 21(2), pages 1-21, December.
    3. Yoshino, Naoyuki & Taghizadeh-Hesary, Farhad, 2014. "Hometown Investment Trust Funds: An Analysis of Credit Risk," ADBI Working Papers 505, Asian Development Bank Institute.
    4. Naoyuki Yoshino & Farhad Taghizadeh-Hesary, 2015. "Analysis of Credit Ratings for Small and Medium-Sized Enterprises: Evidence from Asia," Asian Development Review, MIT Press, vol. 32(2), pages 18-37, September.
    5. Hassen, Azime A., 2016. "Agricultural taxation and economic growth in Ethiopia," 2016 AAAE Fifth International Conference, September 23-26, 2016, Addis Ababa, Ethiopia 246395, African Association of Agricultural Economists (AAAE).
    6. Yoshino, Naoyuki & Taghizadeh-Hesary, Farhad & Nili, Farhad, 2015. "Estimating Dual Deposit Insurance Premium Rates and Forecasting Non-performing Loans: Two New Models," ADBI Working Papers 510, Asian Development Bank Institute.

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