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Opaque Revenue Systems Encourage Tax Evasion In Africa

Opaque Revenue Systems Encourage Tax Evasion In Africa

Corrupt tax officials and lack of transparency in revenue services increase tolerance for tax evasion in Africa, according to a survey conducted in 29 African countries, Reuters reports in AllAfrica.

Most Africans say their willingness to pay taxes is undermined by corrupt revenue authorities, while an opaque tax system actually encourages tax dodging, the Afrobarometer survey shows.

More than a third of people surveyed between 2011 and 2013 said most or all tax officials are corrupt, and another 39 percent think that at least some of them are.

“Distrust in the conduct of tax officials increases tolerance for tax avoidance in principle,
and reported non-compliance with tax obligations in practice,” according to the survey report, entitled “Africa’s Willing Taxpayers Thwarted by Opaque Tax System, Corruption.”

Although the majority of Africans said they think paying taxes is important for the development of their country, 62 percent said they don’t know how much tax they’re supposed to pay and 76 percent said they don’t know how their government uses tax revenue.

West African survey respondents demonstrated the highest support for taxation but had the lowest levels of confidence that fellow citizens are fulfilling their tax obligations. East African respondents reflected the greatest barriers to information. Southern African respondents appeared to have better access to information and perceived less corruption than other regions, according to survey results.

Taxes collected in most African countries fall far below public-sector spending
needs, and most African countries have been forced to rely on foreign aid to fill the gap, Reuters reports.

“As governments face demand for better services and improved living conditions from growing populations, reform of tax and public finance systems to improve domestic revenue collection are likely to remain top development priorities,” the study said.

The findings suggest that African governments need to improve the transparency and
accountability of revenue authorities if they want to strengthen the foundations of a sound
revenue system, Reuters reports.