Share this:
3
Chapter
Tax policy and performance in Africa
Africa has a low tax capacity (ability to collect taxes) of about 20 per cent of GDP and a lower tax revenue to GDP ratio (17 per cent) than other regions, largely because of inefficiencies in tax policy and revenue collection. Thus, addressing tax capacity constraints and collection inefficiencies could boost tax revenue in Africa by 3 per cent of GDP (the difference between the current tax ratio and tax capacity).
Collection efficiency for the value-added tax (VAT) in many African countries is less than 50 per cent, and property and wealth taxation are still un-tapped sources of revenue.
Improving tax governance by combating corruption and bolstering accountability could reduce inefficiencies and, on average, mobilize up to $72 billion a year—about a third of the estimated average investment financing gap of $230 billion for achieving the Sustainable Development Goals (SDGs) and Agenda 2063 in Africa.
