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The Power to Tax in Sub-Saharan Africa: LTUs, VATs, and SARAs

Author

Listed:
  • Christian EBEKE

    (International Monetary Fund (IMF))

  • Mario MANSOUR

    (Fiscal Affairs Department - International Monetary Fund)

  • Grégoire ROTA-GRAZIOSI

    (Ferdi)

Abstract

In the context of achieving the new Sustainable Development Goals, revenue mobilization is a high priority in developing countries and in Sub-Saharan Africa, where governments’ ability to tax remains limited. Using a unique revenue dataset spanning the period 1980-2010, we analyze three important tax reforms: the Large Taxpayers Unit (LTU), the Value Added Tax (VAT), and the Semi-Autonomous Revenue Agency (SARA). We propose an ex-post impact assessment of these tax reforms in SSA countries based on propensity-score matching methodology (PSM) and synthetic control method (SCM). VAT and SARA are found to have an unambiguously large and positive effect on non-resource taxes, while the impact of LTU is insignificant—LTU seems however an important precondition for the adoption of the first two reforms. We conclude also that VAT and SARA display some synergy, and their positive effects strengthen several years after their adoption.Keywords: tax reforms; Africa; revenue mobilization; causality.

Suggested Citation

  • Christian EBEKE & Mario MANSOUR & Grégoire ROTA-GRAZIOSI, 2016. "The Power to Tax in Sub-Saharan Africa: LTUs, VATs, and SARAs," Working Papers P154, FERDI.
    • Handle: RePEc:fdi:wpaper:3005
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    Cited by:

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    2. Christian Ebeke & M Mansour & Grégoire Rota-Graziosi, 2016. "The Power to Tax in Sub-Saharan Africa: LTUs, VATs, and SARAs," Working Papers halshs-01332049, HAL.
    3. Andre Gbato & Falapalaki Lemou & Jean-François Brun, 2021. "Effectiveness of SARA reform in sub-Saharan Africa [Efficacité de la réforme des SARA en Afrique subsaharienne]," Working Papers hal-03119001, HAL.
    4. Fjeldstad, Odd-Helge & Kagoma, Cecilia & Mdee, Ephraim & Sjursen, Ingrid Hoem & Somville, Vincent, 2020. "The customer is king: Evidence on VAT compliance in Tanzania," World Development, Elsevier, vol. 128(C).
    5. Abdoul-Akim Wandaogo & Fayçal Sawadogo & Jesse Lastunen, 2022. "Does the adoption of peer-to-government mobile payments improve tax revenue mobilization in developing countries?," WIDER Working Paper Series wp-2022-18, World Institute for Development Economic Research (UNU-WIDER).
    6. Adandohoin, Kodjo, 2018. "Tax transition in developing countries: Do VAT and excises really work?," MPRA Paper 91522, University Library of Munich, Germany.
    7. Kodjo Adandohoin, 2021. "Tax transition in developing countries: do value added tax and excises really work?," International Economics and Economic Policy, Springer, vol. 18(2), pages 379-424, May.
    8. Arun Kumar Deshmukh & Ashutosh Mohan & Ishi Mohan, 2022. "Goods and Services Tax (GST) Implementation in India: A SAP–LAP–Twitter Analytic Perspective," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 23(2), pages 165-183, June.
    9. Mavungu, Marina Ngoma & Krsic, Nikolina, 2017. "Assessing the impact of tax administration reforms in Sub-Saharan Africa," MPRA Paper 89275, University Library of Munich, Germany.
    10. Adeniyi, Oluwatosin & Kumeka, Terver Theophilus & Alagbada, Oladimeji, 2022. "Natural Resource Dependence and Tax Effort in Sub-Saharan Africa," Journal of Economic Development, The Economic Research Institute, Chung-Ang University, vol. 47(1), pages 29-64, March.
    11. Roel Dom, 2017. "Semi-Autonomous Revenue Authorities in Sub-Saharan Africa: Silver Bullet or White Elephant," Discussion Papers 2017-01, University of Nottingham, CREDIT.
    12. Ali Compaore, 2020. "Access-for-all to Financial Services: Non- resources Tax Revenue-harnessing Opportunities in Developing Countries," Working Papers hal-02901664, HAL.

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    More about this item

    Keywords

    tax reforms; Africa; revenue mobilization; causality.;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General

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