Findings from this paper suggest that governments need to improve the transparency and accountability of revenue authorities if they want to strengthen the foundations of a sound revenue system.
Survey data, covering 29 countries in sub-Saharan Africa reveal widespread citizen commitment to the principle of taxation and to taking responsibility – by paying their taxes – for national development. Taxation systems across the continent however remain opaque to large majorities. Most find it difficult to know what they owe, and the public is even more in the dark when it comes to understanding how tax revenues are actually used by governments. Moreover, perceived corruption among tax authorities remains significant, and evidence suggests these perceptions undermine public commitment to the integrity of the tax system and increase the likelihood of non-compliance.
Key findings:
- More than one-third (35%) of respondents say that ‘most’ or ‘all’ tax officials are corrupt, and another 39% think that at least some of them are. Perceived corruption among tax officials appears to undermine commitment to the integrity of the tax system. Distrust in the conduct of tax officials increases tolerance for tax avoidance in principle, and reported non-compliance with tax obligations in practice.
- Corruption plays an important role in undermining commitment to taxation, both in principle and in practice. Among respondents who perceive that all tax officials are corrupt, tolerance for non-payment of taxes increases substantially.
- Large majorities report that tax systems remain opaque: 62% say it is difficult to find out what taxes they owe, while 76% say it is difficult to find out how the government uses tax revenue.
- West Africans express the highest levels of support for taxation in principle, but the lowest levels of confidence that everyone complies with tax obligations. East Africans face the greatest information barriers. Southern Africans have better access to information, and perceive far less corruption, but they also report that it is somewhat easier to avoid paying taxes than in other regions.
- Broad majorities see taxes as important to their countries’ advancement. Two out of three (66%) say citizens should pay their taxes to government ‘for the country to develop’ compared with just 30% who think their governments should find their resources elsewhere.
- Africans are committed enough to the principle of paying taxes to support development that a majority (52%), albeit slim, is even willing to see their taxes increase, as long as this would result in more services provided by governments.
- A large majority (84%) of Africans find tax evasion wrong; just under half (49%) deem it not only wrong but also punishable, while 35% find it wrong but understandable.
- A majority (58%) of respondents says tax avoidance ‘never’ or only ‘rarely’ occurs. However, a sizeable minority is less convinced, with nearly one in four (23%) saying tax avoidance occurs ‘often’ and another 6% asserting it ‘always’ happens.
- Perceptions about the effectiveness of tax enforcement appear to have a significant impact on compliance. People who say it is difficult or very difficult to avoid paying are also much less likely to report that people actually do avoid paying their taxes.