Good tax collection in Africa

The third edition of the "African Revenue Statistics 1990-2016" (1) was published on the 18th Africa International Economic Forum, held in Paris, on 31 October 2018 (1). The database offers a wide range of latest statistics, enabling many countries, including Morocco, to be compared. The average tax-to-GDP ratio (Africa (21) in 2016 was 18.2%, at the same level as in 2015.

This is a clear improvement over the 13.1% achieved in 2000. The proportions vary by country on the African continent. In the Democratic Republic of Congo, it falls from 7.6% to 201.66%, to Tunisia to 201.46%. Six countries (South Africa, Mauritius, Morocco, Senegal, Togo and Tunisia) show a tax / income ratio. GDP is 20% or more.

This ratio was 22.7% for Latin American and Caribbean countries and 34.3% for OECD countries. For Morocco the tax-GDP ratio increased by 0.5 percentage points, from 25.9% in 2015 to 26.4% in 2016.

By comparison, the average of 21 African countries (2) was 18.2% over the same period. The rate has risen in Morocco since 2000, when it was 23.5%. Over the same period, the average of the same African countries increased from 13.1% in 2000 to 18.2% in 2016. The highest tax-GDP ratio in Morocco in 2008 was 30.2%, the lowest in 2003 was 22.8%.

The indicators show opposite trends. Between 2015 and 2016, tax revenues grew as a percentage of GDP in the countries concerned in 11 and ten of them declined. The largest growth was in botswana (1.3 percentage points), followed by Mali (1.2 percentage points). In the Democratic Republic of Congo and Niger, however, the most significant decrease (more than 2 percentage points) can be observed.

Changes in tax-GDP ratios are mainly due to economic factors. The decline in oil prices and the slowdown in mining and oil activities in the Democratic Republic of Congo and Niger are behind the fall in tax revenues, while revenue in Botswana has strengthened by the strong growth in diamond sales.

In Mali, however, the rise in tax revenue as a percentage of GDP partly reflects the strengthening of tax administration.

Tax revenue of goods and services

African economies continue to rely heavily on the taxation of goods and services, accounting for 54.6% of total tax revenue, based on the average of 21 African countries in this publication. Value added tax (VAT) alone accounts for 29.3% of collected tax revenue. However, the income tax contribution is increasing.

Revenues from income and income taxes account for 34.3% of total tax revenue in Africa in 2016 (21). Since 2000, the main driving force behind the growth of tax revenue. Between 2000 and 2016, from 2.6% of GDP to 6.2% of GDP.

Tax revenues from corporation tax increased by 1.4 percentage points over this period to 2.8% of GDP. While personal income tax revenues rose from 2.1% of GDP in 2013 to 3%, the "historical record".

It should be noted that the share of social security contributions in the total tax revenue is highest in Tunisia (31.6%), Morocco (17.1%) and Egypt (12.6%). In South Africa, Eswatini, Morocco and Mauritius, the most important source of revenue for the national governments is the inheritance tax. In the four countries, they account for more than 80% of tax revenues.

The balance sheet mainly consists of taxes on goods and services. Six countries account for one quarter of non-tax revenues from the sale of goods and services and the collection of administrative fees: Cabo Verde, Ghana, Kenya, Mali, Mauritius and Morocco. In the Kingdom, 66% of revenues from the sale of goods and services by public authorities are collected locally.

The publication also includes data on tax revenues that will continue to decline on average in the 21 countries concerned in 2016 but continue to be a significant source of revenue for some countries. Non-tax revenues, which include revenue from natural resources and subsidies, outnumber 5% of GDP in nine of the 21 countries listed in the publication.

competitiveness

With reference to Morocco, the analysis recalls that it reduced the corporate income tax rate by 5 percentage points in 2008 to improve the competitiveness and flexibility of companies during the financial crisis. The country has been implementing a major tax reform program since 2004.

F. Z. T.

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(1) African Revenue Statistics are the African Taxation Authority (ATAF), the African Union Commission (AUC) and the Organization for Economic Co-operation and Development (OECD) and Development Center, supported by the European Union.
(2) These are South Africa, Botswana, Burkina Faso, Cabo Verde, Cameroon, Congo, Democratic Republic of Congo, Ivory Coast, Egypt, Eswatini, Ghana, Kenya, Mali, Morocco, Mauritius, Niger, Uganda, Togo and Tunisia.