African Multidisciplinary Tax Journal

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• An analysis of the effects of taxation on income inequalities in WAEMU

  This article analyses the potential effect that tax instruments have on income inequalities in sub-Saharan Africa particularly in the West African Economic and Monetary Union (WAEMU). Tax instruments are represented by various types of levies and taxes whereas income inequalities are estimated by the Gini index. Using the generalised method of moments over the period from 1990 to 2017, the results demonstrate that value-added tax, excise duties, and port charges have no effect on income inequalities whereas personal income tax and corporate income tax improve income distribution in the WAEMU. However, the globalisation of economies reverses the effect of corporate income tax. Moreover, tax progressivity reduces inequalities while the tax structure has no significant effect on income inequalities. To this end, the study recommends using direct and progressive tax instruments for the fight against inequalities. Similarly, the fight against aggressive tax optimisation must take a central stage in tax policies within an economy that is increasingly open to multinational companies.

• Tax policy in WAEMU: Tax coordination or competition?

  The objective of this article is to evaluate the nature of tax policy in West African Economic and Monetary Union WAEMU countries with the view to strengthening economic integration. We estimate a spatial autoregressive model (SDM) over the period 2000 to 2017. The strategic tax tool used is that of tax burden and we demonstrate that the spatial autoregressive coefficient has overall significance. The results reveal that there exists a tax competition within the WAEMU zone which is acerbated by heterogonous socio-economic factors such as public expenditure, unemployment, the will to promote the provision of services, and free trade. This article concludes on possible orientations which could foster tax synergy amongst WAEMU countries.

• Determinants of municipal taxes payment by informal micro and small business in Côte d’Ivoire

  This article analyses the determinants of municipal tax payments of informal micro- and small businesses in Côte d'Ivoire. The data used relates to 276 informal production units surveyed in the framework of the CAPEC/IDRC project. Using descriptive statistics and the estimation of a Probit model, the study highlights the variables that both negatively and positively influence tax payments. It emerged that the perception of the high level of taxes, the fact that the manager of the informal production unit is an Ivorian, the narrowness of the market, and the problems regarding premises negatively affected tax payments. Conversely, the business environment, the electronic payment of invoices, the simplification of procedures, the number of employees and the difficulties in accessing financing enhance the propensity of managers to pay taxes.

• An empirical evaluation of the determinants of the property tax compliance rate in Kaduna State, Nigeria

  This study examines empirically the variables that are driving property tax compliance rates in Kaduna State, Nigeria. In doing so, it relies on primary data sources. During the study, 400 respondents were targeted, but 406 completed questionnaires were analysed. The nature of the data collected necessitated employing the ordered logistic regression model to analyse the data. The result indicated that taxpayers' satisfaction with the level of property tax digitalisation, the adequacy of property tax law, the administration of property tax and government provision of public goods are important determinants of the property tax compliance rate in Kaduna State. It further found that the average property tax compliance rate in the State is 18.32 per cent, the average satisfaction with the level of digitalisation of property tax is 39.71 per cent, the average taxpayer's satisfaction with the adequacy of property tax law in the State is 27.68 per cent, the average satisfaction with the administration of property tax is 31.31 per cent and the average taxpayer's satisfaction with the provisions of public goods is 58.21 per cent. The study recommends that the Kaduna State government should enact a property taxation law to adequately take care of the rate, base, time and procedures of filing and payments of the tax. The digitalisation of the tax should go beyond property registration but should cover all other aspects of digital taxation, ranging from assessment to payment of taxes.

• Developments in the use of technologies in African tax administrations

  A substantial number of sub-Saharan African tax administrations have seen efficiency gains by adopting online systems for tax filing and payment. However, the adoption of technology for the automation of tax administration has been markedly slow in comparison to the pace of adoption in developed countries. For African countries' drive toward domestic resource mobilisation to be successful, automation of core processes is fundamental and the adoption of standards in international cooperation, improving data quality and promoting fiscal decentralisation. This article demonstrates that while much progress has been made in automation, Tax Administration Diagnostic Assessment Tool assessments still illustrate several gaps experienced by tax administrations in compliance risk management, statistical analysis, bulk data analysis, and the quality of data. As reflected in stagnant tax gross domestic product ratios, without mitigating these risks and not seizing opportunities offered by instruments such as the exchange of information standards, advances made in automation run the risk of being nullified eventually. Therefore, African tax administrations need a digital roadmap and a set of metrics to measure their progress in automation.

• Constraints to optimising revenue potential in subnational governments in Kenya: Lessons from Nairobi City County

  Optimisation of revenue potential in the subnational governments in Kenya is core to meeting the their recurrent and development expenditure needs without over-relying on national government transfers. However, the subnational governments face constraints that limit their potential to enhance their revenue collections. Therefore, this study examines the constraints to own source revenue (OSR) collections in Nairobi City County (NCC), assesses challenges to optimal collection of parking fees, and identifies measures to address the challenges inherent to the collection of single business permits (SBPs) debts in the county. The study employed desk review and survey design targeting 170 key informants from the NCC Government and the Kenya Revenue Authority distributed across the 17 sub-counties. The study found that the major constraints to OSR collection in the NCC are inadequate revenue collection tools, equipment and machines (82%); inadequate capacity of the debt collection unit to follow taxpayers who default or delay in making payments (68%); poor tax education/awareness within the county (63%); below par adoption of information and communications technology systems combined with the prevalence of manual revenue collection in making payments (58%); inadequate staff numbers to collect the fees and charges (53%); and lack of legal framework (policies, rules and regulations) for collection of all the revenue streams (51%). The study also found that the main challenges to optimal collection of parking fees in the NCC are high parking fees; system failure; insecurity; unmarked parking lots; interference by parking boys; lack of parking spaces, among others. The study makes suggestions for addressing the challenges in the collection of SBPs debts and provides comprehensive recommendations on dealing with the identified constraints to revenue optimisation in the NCC, applicable to other subnational governments across sub-Saharan Africa.

• Property taxation and efficiency scores of metropolitan municipalities in South Africa

  Property taxation is a primary source of income for urban municipalities (metros), particularly in South Africa. Property tax collection amongst metros varies, which begs the question of whether differences in tax efficiency scores can be explained by institutional factors, or whether economic factors such as the size of the tax base or the ability to raise other revenues play a role. This article estimates property tax efficiency scores for eight South African metros and considers factors that affect these scores. We use municipal data and apply the data envelopment analysis method to estimate the efficiency scores for property taxation. This is followed by a Tobit regression to evaluate the determinants of these scores. The results show that although metros achieve relatively high efficiency scores, property tax collections can be improved. In addition, economic indicators explain variations in efficiency scores, but financial management remains key to delivering municipal infrastructure.

• Estimating the property taxation in WAEMU countries: An analysis

  The question of efficient domestic tax revenue mobilisation in developing countries has continued to receive particular attention in recent years. This article evaluates the potential of property tax revenues in Western African Economic and Monetary Union (WAEMU) countries. To this end, three methods were employed using data from the Government Financial Statistics (GFS) of the International Monetary Fund (IMF) and the World Bank's World Development Indicators (WDI). The Hodrick-Prescott filter method (1980) further allowed for a chronological estimation of the potential of property taxes while the optimisation model of Scully (1995) facilitated a punctual estimation of the potential informs concerning the significance of the parameters. Finally, the quadratic model of Laffer (1981) completed the results of Scully's model. Overall, the results demonstrate the existence of sub-optimality in the collection of property taxes in WAEMU countries.

• Assessing taxpayers’ awareness on their right to appeal property tax assessment in the city of Mzuzu – Malawi

  Valuation inaccuracy when assessing properties for taxation purposes, which results in taxpayers deciding to evade property taxes due to higher taxes influenced by incorrect assessments, affects the economy of the country negatively. This research evaluated how a lack of taxpayer awareness of their right to appeal on estimated property taxes affect property tax compliance in Mzuzu City. Qualitative and quantitative data were collected by administering questionnaires while the study areas were selected based on their planning nature and different state in terms of the income of the dwellers. Taxpayers were selected randomly and the sample from study areas was found by matching the total number of taxable properties in the area to the appropriate sample size. The study has confirmed that the majority of taxpayers do not take any action if an assessment is incorrect due to a lack of knowledge of tax appeals which often leads to tax evasion. Consequently, the government needs to extensively educate taxpayers on tax appeals through, for example, radio and television media.

• Using a digitalisation approach to optimising potential property tax revenues in the Democratic Republic of Congo

  Optimising property tax is beneficial for real estate investors but can also encourage tax avoidance and fraud by economic operators if the state does not put safeguards in place to secure its rights. On the one hand, the state must first control the number of buildings per category and identify the property owners to be taxed. Thanks to digitalisation, tax administrations will change the current approach in favour of modern management tools such as those used in other countries. On the other hand, the state must encourage investors to build more apartment buildings in third- and fourth-tier localities to benefit from the tax relief associated with these properties. These proposed solutions, which are supported by figures from the city of Kinshasa, are used as an example and presented in this article. It highlights that this approach allows the two stakeholders (tax administration and taxpayers) to mutually benefit while effectively reducing the behaviour at fault.

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• Tax revenue potential and effort in Ethiopia: A comparative analysis of stochastic frontier analysis vs utility maximisation function as a new measure of tax effort

  This article tests the new measure of tax efforts following Dalamagas et al (2019) who argued that in the context of the Arrow-Debreu economy, with fixed labour supply and no savings, disposable income is equal to private consumption, a utility function with two arguments, income, and government...

• Does digitalisation improve the mobilisation of tax revenues in Africa?

  The objective of this paper is to examine the effect of digitalisation on tax revenue mobilisation in Africa. Using panel data from 40 selected African countries over the period 1980-2017, econometric estimates were implemented using the generalised method of moments. Our results indicated that...

• The role of public tax awareness to domestic revenue mobilisation in Uganda

  Governments are weak at promoting and endorsing their gains and programmes. Taking Uganda in context, this paper explored the current tools for public tax awareness on Domestic Revenue Mobilisation (DRM), an oft-neglected area yet crucial for tax revenue generation. The note overviewed the DRM...

• Revenue enhancements in Kampala, Uganda: Lessons for other African cities

  The Kampala Capital City Authority (KCCA) are optimistic that reforms can yield substantial own source revenues if the reform strategy and implementation processes are well designed and executed. Within four years of establishment, the KCCA increased their own source revenue by more than 100 per...

• Challenges facing the property tax collection system: A case study of the City of Harare municipality

  This article assesses the challenges facing the City of Harare's property tax collection system and proposes measures to improve revenue collection. The research used interviews and questionnaires to collect data from the selected sample of 180 respondents that included municipality officials as...

• Mitigating the cost impact of ICT system failures in tax agencies: Lessons from Uganda

  Tax administrations that have adopted information and communication technology (ICT) face the challenge of system failures. Exhaustive literature exists on the causes and nature of such downtime or failures. This study investigated the cost of downtime in a tax administration, taking the case of...

• Carbon tax to lower emissions: The likely impact of carbon emissions tax on households in South Africa

  The South African government, along with other countries, has signed the Paris Agreement to commit to lowering carbon dioxide emissions. This has led to the introduction of carbon tax in different countries to combat global warming. The Mexican government was the first to introduce carbon tax...

• Property taxation and efficiency scores of metropolitan municipalities in South Africa

  Property taxation is a primary source of income for urban municipalities (metros), particularly in South Africa. Property tax collection amongst metros varies, which begs the question of whether differences in tax efficiency scores can be explained by institutional factors, or whether economic...

• Assessment of the impact of electronic fiscal devices on compliance and VAT collection in Malawi

  The study examined the effectiveness of using electronic fiscal devices (EFDs) in revenue collection and compliance. The study used a quantitative approach for the analysis. Timely filing of tax returns was used as a measure of compliance whereas value-added tax (VAT) revenue collection as a...

• Assessing taxpayers’ awareness on their right to appeal property tax assessment in the city of Mzuzu – Malawi

  Valuation inaccuracy when assessing properties for taxation purposes, which results in taxpayers deciding to evade property taxes due to higher taxes influenced by incorrect assessments, affects the economy of the country negatively. This research evaluated how a lack of taxpayer awareness of their ...