African Governments Could Gain $50B In Taxes Per Year By Introducing Digital IDs

Written by Peter Pedroncelli

Approximately 500 million sub-Sahara Africans have no official identification document and governments say this means they are excluded from banking systems.

Implementing digital ID systems could bring African governments a cumulative $50 billion tax windfall every year, a new report suggests.

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Digitizing tax administration and investing in data collection could help to broaden the tax base, according to the Commission for Africa’s economic report on Africa 2019.

Digital IDs could help improve tax assessments and administration, and
fill government coffers.

Digital IDs
Egyptian Zeinab al-Shogery, 58 shows her identification card while she prepares to vote at a polling center in Giza, Egypt. AP Photo – Nasser Nasser

There are an estimated 1.1 billion people worldwide who cannot officially prove their identity, according to the World Bank. Almost half live in sub-Saharan Africa, World Economic Forum reported.

Of the people who do not have any form of identification, four out of 10 are younger than 18, while one out of six are below the age of 5.

Digital identification can help governments to identify and track taxpayers and gives people access to banking services that they would otherwise be unable to use.

Digital IDs to assist with taxation

The report points out examples of countries where money was saved through the digitization of taxation.

Rwanda has boosted tax revenue collection by 6 percent of GDP by introducing e-taxation, according to the report

The South African government used an online tax payments system to save 22.4 percent on the costs of administering and processing tax payments from its citizens, NewTimes reports.