Taxing a Developing Africa: Citizens' Views
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A presentation on African Citizens views on taxation, compliance and compliance at the Fifth Afrobarometer Round 5 Global Release Event in Lagos, Nigeria on March 4, 2014.
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Taxing a Developing Africa: Citizens' Views
- 1. WWW.AFROBAROMETER.ORG Taxing a Developing Africa: Citizens' Views Rose Aiko & Carolyn Logan Best Western Plus Hotel Conference Hall, 5th March 2014 REPOA – Policy Research for Development
- 2. WWW.AFROBAROMETER.ORG Afrobarometer Core Objectives • Expand the survey database in Africa • Enhance visibility of Afrobarometer findings among African policy actors • Build African capacity for survey research and analysis • Strengthen and indigenize network management 2
- 3. WWW.AFROBAROMETER.ORG Country Coverage: 1999-2013 Round 1, 1999-2001, 12 countries • Southern Africa: Botswana, Lesotho, Malawi, Namibia, South Africa, Zambia, Zimbabwe • West Africa: Ghana, Mali, Nigeria • East Africa: Tanzania, Uganda Round 2, 2002-2003, 16 countries • Cape Verde, Kenya, Mozambique, Senegal Round 3, 2005-2006, 18 countries • Benin, Madagascar Round 4, 2008-2009, 20 countries • Burkina Faso, Liberia Round 5, 2011-2013, 35 countries • Algeria, Burundi, Cameroon, Cote d’Ivoire, Egypt, Ethiopia, Guinea, Mauritius, Morocco, Niger, Togo, Tunisia, Sierra Leone, Sudan, Swaziland 3
- 4. WWW.AFROBAROMETER.ORG Round 5 “Global Release” 7 events in 7 cities (over 7+ months…) Lived Poverty and Economy (Johannesburg) Freedom of Speech and Globalizing Communications (Nairobi) Corruption (Dakar) Governance; Extractive Resources (Accra) Taxation (Lagos, today) Gender (Tunis, forthcoming) Democracy (Bamako, forthcoming) 4
- 5. • Background • Taxes as development resources • The legitimacy of taxation • Tax compliance and threat of enforcement • Transparency & integrity of tax authorities • Corruption and compliance • Conclusion In this presentation
- 6. WWW.AFROBAROMETER.ORG 1. Background • Mobilization of resources through taxation is a top priority on Africa's development agenda. • Revenue generation capacity (ability of tax authorities to generate revenue through taxation) improving, but unable to match public sector spending needs. • For many countries tax—spending gap is high, leading to reliance on unreliable and often conditionality attached foreign aid. • Comparison of revenue yield in Africa with OECD, one of Africa’s largest benefactors, suggest scope exists for more revenue generation. • What are Africans opinions and attitudes towards taxation?
- 7. WWW.AFROBAROMETER.ORG 2. Taxes as development resources • Broad majorities see taxes as important to their countries' advancement; • Substantial variation across countries • Support for taxation is a majority position in all regions, but is is much higher in West Africa; • A majority (52%) across Africa, albeit slim, is even willing to see their taxes increase, as long as this would result in more services provided by governments
- 8. Support for taxation for development | 29 countries, 2011-2013 84% 84% 82% 81% 81% 79% 78% 77% 77% 73% 72% 69% 69% 68% 68% 67% 66% 64% 64% 63% 61% 58% 57% 56% 55% 53% 51% 50% 45% 32% 0% 20% 40% 60% 80% 100% Ghana Coted’Ivoire Cameroon Senegal Liberia Mali Niger SierraLeone Swaziland Kenya Mozambique Benin CapeVerde BurkinaFaso SouthAfrica Mauritius Average Madagascar Nigeria Zambia Togo Zimbabwe Botswana Burundi Tanzania Namibia Uganda Guinea Malawi Lesotho Must pay tax No need to tax Q: Which of the following statements is closest to your view: 1: Citizens must pay their taxes to the government in order for our country to develop. 2: The government can find enough resources for development from other sources without having to tax the people.’
- 9. Support for taxation for development, by region |29 countries |2011-2013 59% 60% 73% 66% 0% 20% 40% 60% 80% East Africa Southern Africa West Africa Average Support for taxation is a majority position in all regions, but is substantially higher in West Africa than East or Southern Africa.
- 10. 70% 68% 65% 65% 64% 63% 60% 59% 58% 57% 56% 56% 54% 53% 52% 52% 51% 51% 49% 49% 48% 48% 46% 45% 41% 37% 35% 33% 33% 31% 23% 25% 31% 26% 27% 32% 21% 35% 35% 37% 27% 25% 31% 24% 37% 35% 43% 31% 37% 33% 20% 29% 45% 41% 48% 44% 60% 58% 46% 51% 0% 20% 40% 60% 80% 100% Senegal Niger Sierra Leone Cote d’Ivoire Tanzania Liberia Cameroon Mali Ghana Benin Togo Swaziland Mauritius Mozambique Guinea Average Nigeria Burkina Faso South Africa Kenya Cape Verde Madagascar Namibia Zambia Uganda Lesotho Burundi Malawi Botswana Zimbabwe Higher tax, more services Neither / don't know Lower tax, fewer services Tax-for-service trade-off |29 countries |2011-2013 ‘Which of the following statements is closest to your view: Statement 1: It is better to pay higher taxes, if it means that there will be more services provided by government. Statement 2: It is better to pay lower taxes, even if it means there will be fewer services provided by government.’
- 11. WWW.AFROBAROMETER.ORG 3. The legitimacy of taxation • There is significant support , majority in every country, for the role of revenue authorities in collecting taxes from people. • Across 16 countries tracked for the last decade, support for the role of tax authorities has grown steadily, from 64% in 2002 to 71% circa 2012 • Majority (84%) reject deception about paying tax obligations, though not all fully condemn it. • 35% say it is wrong but understandable • Just under half (49%) deem it wrong and punishable
- 12. Authorities' rights to tax citizens |high & low countries | 2011-2013 Q: ‘Please tell me whether you disagree or agree with the following statement: The tax authorities always have the right to make people pay taxes.’ (% ‘agree’ or ‘strongly agree’) 90% 84% 82% 82% 82% 81% 70% 59% 59% 58% 58% 52% 52% 0% 20% 40% 60% 80% 100% Ghana Niger SierraLeone Swaziland Liberia Botswana Average Benin Guinea BurkinaFaso Lesotho Madagascar Togo -Tax departments enjoy the highest levels of legitimacy in Ghana (90%) and Niger (84%); lowest in Madagascar and Togo (52% each).
- 13. Increasing endorsement of tax authority legitimacy |16 countries | 2002-2012 -Across 16 countries tracked for the last decade, support for the role of tax authorities has grown steadily, from 64% in 2002 to 71% circa 2012 64% 64% 67% 71% 50% 60% 70% 80% 2002 2005 2008 2012
- 14. Q: Please tell me whether you think the following action is not wrong at all, wrong but understandable, or wrong and punishable: not paying the taxes they owe on their income.’ Tolerance for tax avoidance | 29 countries, 2011-2013 73% 65% 63% 63% 62% 61% 58% 57% 56% 55% 53% 53% 52% 52% 51% 51% 49% 49% 45% 42% 41% 40% 40% 37% 37% 36% 35% 32% 31% 28% 23% 30% 29% 29% 19% 24% 36% 25% 38% 31% 35% 38% 43% 36% 28% 32% 35% 37% 33% 45% 46% 44% 47% 19% 49% 33% 38% 46% 33% 42% 0% 20% 40% 60% 80% 100% Mauritius Mali Ghana Cameroon Burundi Niger Swaziland Liberia Senegal Botswana Cote d’Ivoire Sierra Leone Benin South Africa Guinea Kenya Average Namibia Tanzania Togo Zambia Burkina Faso Nigeria Lesotho Zimbabwe Madagascar Cape Verde Uganda Mozambique Malawi Wrong and punishable Wrong but understandable -Majority reject deception about paying tax obligations,
- 15. WWW.AFROBAROMETER.ORG 4. Tax compliance and threat of enforcemen • A majority (58%) believes compliance is widespread • A sizeable minority is less convinced: nearly 1 in 3 (29%) say people ‘often’ or “always” avoid paying taxes they owe. • Governments seem to have, nonetheless, established a credible threat of enforcement: – more than two thirds (69%) believe that it is ‘difficult’ or ‘very difficult’ to ‘avoid paying income or property taxes that you owe to government’
- 16. WWW.AFROBAROMETER.ORG Perceived non-compliance with tax requirements | 29 countries, 2011-2013 12% 13% 14% 15% 16% 19% 21% 21% 21% 22% 23% 24% 25% 26% 28% 29% 29% 29% 30% 30% 34% 36% 37% 37% 38% 42% 44% 45% 53% 56% 0% 20% 40% 60% Namibia Botsw… Niger Zambia Burundi Zimba… Malawi Mauritius Swazil… Uganda Moza… Lesotho Mada… Kenya Tanzania Liberia Average Mali Guinea Ghana Nigeria South… Togo Benin Senegal Burkin… Cape… Camer… Sierra… Cote… Q: ‘In your opinion, how often, in this country: do people avoid paying the taxes that they owe the government?’ (% saying ‘often’ or ‘always’)
- 17. WWW.AFROBAROMETER.ORG Difficulty of avoiding taxes | 29 countries, 2011-2013 69% 13% 0% 20% 40% 60% 80% 100% Burundi Mali Mauritius Togo Tanzania Uganda Kenya Zimbabwe Guinea Nigeria Burkina Faso Niger Malawi Zambia Cape Verde Benin Average Sierra Leone Liberia Madagascar Cote d’Ivoire Senegal Ghana Mozambique Swaziland Cameroon South Africa Botswana Namibia Lesotho Difficult / Very difficult Easy / Very easy Don't owe taxes Don't know Q: ‘Based on your experience, how easy or difficult is it to do each of the following: To avoid paying the income or property taxes that you owe to government.’
- 18. WWW.AFROBAROMETER.ORG 5. Transparency and integrity of tax officials • Tax systems are largely perceived to be opaque by citizens – Six of ten (62%) indicate it is ‘difficult’ or ‘very difficult’ to get information about the taxes and fees they are required to pay • It is even more difficult to know how the monies are spent – 76% say it is difficult or very difficult to find out how the money is used • Information access is more challenging in Eastern Africa; relatively easier in Southern Africa
- 19. Information about taxes and fees to pay is difficult to obtain 83% 77% 75% 74% 73% 73% 72% 71% 62% 47% 45% 43% 37% 0% 20% 40% 60% 80% 100% Burundi Guinea Malawi Togo Kenya Uganda Tanzania SierraLeone Average SouthAfrica Cote… Botswana Mauritius Q: ‘Based on your experience, how easy or difficult is it to do each of the following: To find out what taxes and fees you are supposed to pay to the government.’ (% ‘difficult’ or ‘very difficult’)
- 20. Information about how governments spend tax monies is even more difficult to access 89% 86% 85% 85% 84% 76% 63% 61% 59% 57% 0% 20% 40% 60% 80% 100% Burundi Tanzania Guinea Kenya Uganda Average Namibia Lesotho SouthAfrica Botswana Q: ‘Based on your experience, how easy or difficult is it to do each of the following: To find out how government uses the revenues from people’s taxes and fees.’ (% ‘difficult’ or ‘very difficult’)
- 21. WWW.AFROBAROMETER.ORG 6. Corruption and tax compliance • Clear reservations as regards incorruptibility of tax officials. – One in three citizens (35%) says ‘most’ or ‘all’ tax officials are corrupt, and another 39% reports that at least ‘some’ of them are. – Across the 16 countries tracked since 2005, those reporting that at least ‘some of them’ are corrupt has substantially increased (from 63% in 2005 to 72% in 2012). • Corruption increases tolerance for non-compliance with tax obligations
- 22. WWW.AFROBAROMETER.ORG Perceived corruption among tax authorities | 29 countries, 2011-2013 0% 20% 40% 60% 80% 100% Cameroon Nigeria Sierra Leone Benin Liberia Togo Zimbabwe Burundi Uganda Mali Ghana Kenya Tanzania Guinea Average Burkina Faso Cote d’Ivoire Mozambique Namibia Malawi Niger Swaziland Madagascar South Africa Zambia Senegal Lesotho Botswana Cape Verde Mauritius Most/All Some None Don't know -Nigeria and Cameroon face largest credibility gap; Mauritius and Cape Verde the least Q: ‘How many of the following people do you think are involved in corruption, or haven’t you heard enough about them to say: tax officials, like Ministry of Finance officials or local government tax collectors?’
- 23. WWW.AFROBAROMETER.ORG Changes in perceptions of corruption among tax authorities|16 countries, 2005- 2012 12% 11% 11% 30% 35% 40% 33% 33% 32% 24% 21% 17% 0% 10% 20% 30% 40% 50% Circa 2005 Circa 2008 Circa 2012 None of them Some of them Most / All of them Don't know
- 24. 13% 9% 10% 14% 29% 36% 38% 37% 55% 52% 49% 47% 0% 10% 20% 30% 40% 50% 60% None Some of them Most of them All of them Extent of perceived corruption among tax officials Not wrong at all Wrong but understandable Wrong and punishable Tolerance for tax avoidance Perceived corruption and tolerance for taxation avoidance Among those who perceive that all tax officials are corrupt, tolerance for non-payment of taxes increases substantially
- 25. WWW.AFROBAROMETER.ORG Conclusions • Reform of domestic taxation systems will remain a key priority in foreseeable future. • Africans are largely on board: – people affirm that national development should be built on a foundation of domestic taxation. – tax authorities enjoy widespread – and growing – legitimacy among citizens – significant numbers also affirm the importance of compliance with tax obligations
- 26. WWW.AFROBAROMETER.ORG Conclusions • Reform of domestic taxation systems will remain a key priority in foreseeable future. • Africans are largely on board • But Transparency of tax authorities and accountability of public finance systems remain public concerns. • Integrity of tax authorities also a major challenge; undermines compliance. • Improving access to tax and government spending information, while reducing corruption will help encourage voluntary compliance; enhance government revenue generation.