50% of Africans willing to pay more taxes in exchange for more govt services – Afrobarometer survey

Afrobarometer survey across 34 African countries has shown that 50 percent of Africans are willing to pay higher taxes in exchange for more government services whiles 42 percent prefer lower taxes in exchange for fewer services.

It further indicated that Africans that approves government’s performance in providing services are more likely to endorse higher taxes with more services.

“59 percent of majority also willing to support paying more in taxes to support youth programs whiles 65 percent aiming for national development”, the survey noted.

The survey indicated that 52 percent thus more than half of Africans say citizens “often” or “always” avoid paying their taxes which varies in countries such as 16 percent in Ethiopia to 80 percent in Liberia.

“Perceived tax avoidance has skyrocketed over the past decade, increasing in all 30 countries for which over-time data are available”, the survey noted.

the survey noted that solid 61 percent majority finds it difficult to know the supposed taxes or fees they are to pay and 77 percent don’t know how government uses tax revenue.

“Only half (51%) of respondents say their government generally uses tax revenues for the well-being of citizen”, the survey indicated.

But on the average, more than one in three respondents thus, 35 percent believe that “most” or “all” tax officials are corrupt. Only four in 10 Africans thus 41percent say they trust their tax office “somewhat” or “a lot.”

Legitimacy and fairness of taxation

Government’s right to collect taxes
Across the 34-country sample, six out of 10 Africans (61%) “agree” or “strongly agree” that tax authorities always have the right to make people pay taxes. About one-third (33%) disagree.

These attitudes vary considerably by country. While more than eight in 10 respondents affirm the state’s ability to collect taxes in Sierra Leone (89%), Liberia (87%), the Gambia (84%), and Ethiopia (81%), majorities in six countries disagree: Malawi (60%), Togo (58%), Benin (57%), Niger (54%), Guinea (53%), and Lesotho (52%).

Across countries, urban residents (64%) are somewhat more supportive of the government’s right to collect taxes than rural dwellers (59%), as are men (63%) compared to women (59%).

This support increases with respondents’ education level, ranging from 54% of those with no formal schooling to 70% of those with post-secondary qualifications. Likewise, respondents who have experienced no (66%) or low (65%) lived poverty in the past 12months more commonly affirm the legitimacy of taxation than respondents who have experienced lived poverty on a more regular basis (56%-59%).

Citizens who are employed full time (67%) or part time (64%) are more supportive of the government’s right to collect taxes than those who are not employed (57%-61%).

Afrobarometer’s Lived Poverty Index (LPI) measures respondents’ levels of material deprivation by asking how often they or their families went without basic necessities (enough food, enough water, medical care, enough cooking fuel, and a cash income) during the preceding year. For more on lived poverty, see Mattes (2020).

What are factors that might influence the perceived legitimacy of taxation? people who say they don’t trust the tax office or the president “at all” are considerably more likely to disagree (45% and 41%, respectively) with a government right to taxation than are people who say they trust the tax office or the president “a lot” (25% and 28%, respectively).

Similarly, respondents who think the executive lacks accountability – i.e. ignores Parliament and the law – are more likely to disagree with the idea that the government can enforce tax collection.

Moreover, people who offer negative evaluations of government performance are more likely to deny a government right to collect taxes, for example, 36% of people who say that government is doing “very badly” at managing the economy disagree with government having the right to collect taxes, compared with 26% of those who feel the government is doing “very well” in managing the economy.

Similarly, differences appear consistently across a range of areas of government performance, including creating jobs (34% vs. 28%), narrowing gaps between rich and poor (34% vs. 28%), addressing educational needs (36% vs. 29%), and fighting corruption (35% vs. 29%). Lower legitimacy of taxation among people critical of government performance is in line with earlier findings using Afrobarometer Round 6 data (collected in 2014/2015) (Isbell, 2016).

Fairness of the tax system

Seven in 10 African (69%) “agree” or “strongly agree” that it is fair to tax rich people at a higher rate than ordinary people in order to fund government programs to benefit the poor, while just 25% disagree.
This idea wins majority support in every surveyed country except Angola, and even there, supporters outnumber opponents 49% to 30%. More than eight in 10 citizens endorse higher tax rates for the wealthy in Tunisia (91%) and Gabon (83%).

But Africans hold mixed views on the fairness of their tax rates. Across the 34-country sample, almost half (47%) say that ordinary people are required to pay “somewhat too much” or “far too much” in taxes (Figure 6). This is a particular concern in Kenya (66%), Uganda (65%), and Eswatini (63%), while fewer than one in three citizens in Mozambique (32%), Niger (32%), and Liberia (31%) feel this way.

About one-third (32%) of respondents across all countries say that ordinary people pay about the right amount of taxes, a view that is shared widely in Niger (53%), Mali (47%), Tanzania (46%), and Liberia (45%). Only a small minority (12% on average) say that ordinary people pay too little in taxes.

In contrast, fewer than one in five respondents (18%) feel that the rich are overtaxed. A plurality (36%) say the wealthy pay “somewhat too little” or “far too little” in taxes, while 31% believe they are taxed about the right amount.

However, these views vary widely across countries. Only 13% of Tanzanians and 21% of Malawians and Gambians think the rich pay too little, compared to at least six in 10 Mauritians (62%), Tunisians (62%), and Gabonese (64%).

The view that the rich pay about the right amount in taxes is most common in Niger (48%), Burkina Faso (45%), and Tanzania (44%), while Tunisians (9%), Sudanese (14%), and Ugandans (18%) are least satisfied.

Taxes and government accountability

People’s willingness to pay taxes may be influenced by how they think their taxes are being used (D’Arcy, 2011; Ali, Fjeldstad, & Sjursen, 2014; Isbell, 2016). Across the 34-country sample, only half (51%) of respondents say that their government uses taxes for the well-being of citizens.

However, significant variation exists across the sample. While more than seven in 10 respondents in Tanzania (76%), Burkina Faso (71%), and Mauritius (71%) report that their government uses taxes for the well-being of citizens, fewer than one in three feel this way in Zimbabwe (31%), Eswatini (30%), and Morocco (26%).

Two-thirds (67%) of Africans say the executive should be required to explain to Parliament how the government spends taxpayers’ money (Figure 9). Respondents in the Gambia (84%), Cabo Verde (82%), Mauritius (78%), Mali (78%), and Ghana (78%) are most insistent on parliamentary monitoring of how the government spends tax revenues. Around half of citizens in Cameroon (49%), Mozambique (49%), South Africa (47%), and Tunisia (49%) say the president should not have to “waste his time” by justifying his actions to Parliament.

Views on the trade-off of taxes and government services are divided. Half (50%) of respondents say they would be willing to pay higher taxes if it would mean more government services, but almost as many (42%) would prefer lower taxes even this would result in fewer government services.

While most country-level responses reflect this division, strong majorities favour higher taxes with more services in Liberia (67%), Mali (65%), and Ethiopia (63%), while modest majorities opt for lower taxes with fewer services in Morocco (56%), Zimbabwe (56%), Uganda (53%), Malawi (53%), Benin (52%), and the Gambia (51%).

Views on the balance of taxes and services differ significantly by respondents’ age and education levels, but not by economic or employment status.

Younger citizens are more likely than their elders to favour higher taxes for more services, ranging from 54% of 18- to 25-year-olds to just 43% of those over age 65). Likewise, a preference for higher taxes with more services is more common among respondents with a post-secondary education (55%) than among those with primary schooling (46%) or no formal schooling (48%).

But how people think about the taxes-vs.-services trade-off may also be linked to their experience of how the government has performed in delivering services. Looking at a variety of areas of government performance – such as narrowing income gaps, keeping prices stable, managing the economy, and creating jobs – it appears that people who are more positive in their evaluations of government performance are also more likely to prefer higher taxes with more services.

While views on higher taxes for more services in general are mixed, six in 10 respondents (59%) say they would “somewhat” or “strongly” support a government decision to raise taxes to fund programs to help young people, while only 33% would oppose such a move.

Benin is the only country where a majority (51%) of citizens oppose such a move
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Two-thirds (65%) of Africans would also be willing to pay more in taxes in order to fund their country’s development from its own resources instead of relying on external loans.

More than three-fourths of citizens favour paying for development through domestic resources, even at the cost of higher taxes, in Gabon (83%), Senegal (79%), Liberia (78%), Niger (77%), Tunisia (77%), and Tanzania (76%).

Ethiopia is the only surveyed country where a majority (51%) prefer the use of external loans to support national development, even at the risk of increasing foreign indebtedness.

Experiences with taxes

Next we turn to people’s encounters with taxation. Even if a majority of Africans see taxation as legitimate and many are willing to pay higher taxes in support of specific objectives, their experiences and observations of whether taxation is administered fairly, transparently, and honestly can have important implications for their willingness to comply (OECD, 2019; D’Arcy, 2011).

On average across 34 countries, around half of Africans think their compatriots aren’t paying their fair share: 52% of respondents say people in their country “often” or “always” avoid paying their taxes. Only 39% say this happens “rarely” or “never”.

Strong majorities say tax avoidance is rare in Ethiopia (81%) and Niger (65%). But more than seven in 10 citizens say it’s a frequent practice in Liberia (80%), Côte d’Ivoire (75%), Tunisia (74%), Ghana (73%), and Cameroon (73%).

Over the past decade, perceptions that tax avoidance is a common occurrence have increased dramatically. On average across 30 countries surveyed in both 2011/2013 and 2019/2021, the belief that people “often” or “always” avoid paying their taxes has risen by 23 percentage points, including increases in every surveyed country (Figure 16). Jumps of more than 30 percentage points have occurred in Liberia (+52 points), Ghana (+42 points), Mozambique (+36 points), Zimbabwe (+34), Kenya (+33 points), and Botswana (+31 points).

What might explain high levels of tax avoidance reported by ordinary citizens? Inadequate knowledge about how taxation works and how tax revenues are used is one of several factors identified as contributing to poor tax compliance (Ali, Fjeldstad, & Sjursen, 2014).

On average, six in 10 respondents (61%) say they find it “difficult” or “very difficult” to find out which taxes or fees they are supposed to pay. Majorities report such problems in 26 of the 34 countries, including more than eight in 10 Guineans (86%) and Malawians (85%).

An even larger majority (77%) report that it’s difficult to find out how their taxes are used. A majority in every surveyed country report this difficulty, led by 92% of Guineans, 91% of Gabonese, and 88% of Kenyans.

On average across the 27 countries in which this question was asked in both 2011/2013 and 2019/2021, the proportion of respondents who say it’s difficult to find out which taxes or fees to pay has not changed significantly over the past decade. But many countries show significant changes.

Increases in the share of respondents who find it difficult are largest in Côte d’Ivoire (+17 percentage points), Lesotho (+14 points) and Senegal (+14 points), while double-digit decreases (i.e. improvements) are recorded in Sierra Leone (-22 points), Zimbabwe (-17 points), Mozambique (-13 points), and Togo (-12 points).

Besides difficulties in obtaining information about taxes, low tax compliance may also be linked to attitudes toward or evaluations of those tasked with collecting taxes.,

On average across 34 countries, more than one in three respondents (35%) believe that “most” or “all” tax officials are corrupt. Assessments vary considerably by country, ranging from just one in 10 in Tanzania (9%) and Cabo Verde (12%) to almost two-thirds (64%) in Cameroon.

Popular trust also varies widely by country: Fewer than one-fourth of citizens say they trust the tax office “somewhat” or “a lot” in Sudan (18%) and Gabon (24%), while solid majorities do so in Tanzania (81%) and Niger (61%). On average, however, just four in 10 Africans (41%) express trust in their tax office.

The negative relationship between perceived corruption and trust, i.e. countries in which more people perceive widespread corruption among tax officials tend to report less popular trust in the tax office. Indeed, at the level of the individual (and not accounting for country-level clustering of the data), we find a statistically significant and moderately sized negative correlation between the two variables (Pearson’s r = -0.310, p<0.001).

On average across 30 countries, perceived corruption among tax officials has not changed over the past decade. But it has increased significantly (more than 3 percentage points) in 11 countries, led by Senegal (+18 percentage points) and Guinea (+15 points) (Figure 20). Conversely, considerably fewer respondents now report corruption among tax officials in six countries, including Tanzania (-29 percentage points), Sierra Leone (-22 points), and Nigeria (-22 points).

Conclusion

Amid the economic devastation that the COVID-19 pandemic has caused in many developing countries, taxation will play a key role in rebuilding, both as a source of government revenue and as a tool to stimulate investment.

Our examination of popular attitudes toward taxation points to several worrying trends.
First, perceptions of tax avoidance have increased over the past decade in every country for which we have data, often by more than 20 percentage points. If countries’ ability to bounce back from the economic and social shock of COVID-19 depends in part on how successfully they raise revenue through taxation, this trend does not instill great optimism.

Second, the popular legitimacy of taxation is waning. Although a majority of Africans still affirm that governments have the right to collect taxes, this support is weaker than a decade ago in 22 out of 30 countries. Beyond possible negative effects on tax compliance – and revenues – in the short and medium term, declining legitimacy of taxation may be troubling news for governments in the longer term. Without broad popular support for the government’s right to perform one of its central responsibilities, other powers of the state may be called into question.

Importantly, the perceived legitimacy of taxation is particularly weak among people who distrust the tax office and the president and those who think the president acts without constraints by Parliament and the legal system. Governments are well advised to take note of how connected the right to collect taxes appears to be with notions of checks and balances of executive powers and the conduct of those involved in taxation.

Third, solid majorities of Africans continue to report that it’s difficult to find out which taxes and fees they are supposed to pay and how the government uses the tax revenues it collects. And only half of respondents believe that their government generally uses tax revenues for the well-being of its citizens. This may have long-term negative consequences, undermining a “fiscal social contract” that can promote improved taxpayer compliance and greater government responsiveness to taxpayers’ priorities (Moore et al., 2018).

Fourth, only about a third of Africans think tax rates are “about right,” a factor that can also weaken tax legitimacy and compliance.

Fifth, public perceptions of widespread corruption among tax officials are not abating – and in many countries are increasing, with likely implications for popular trust and taxpayer compliance. An analysis of the few countries where these negative assessments have decreased over the past decade – including Tanzania, Sierra Leone, and Nigeria – may provide some leads for corrective action.

Despite these negative findings, there are some reasons for optimism. Most Africans say they would be willing to pay more in taxes to support youth programs and “national development,” a large basket that could contain a variety of initiatives. Half endorse higher taxes in exchange for more government services in general. While not a slam dunk, these findings suggest an openness to taxation that would likely be strengthened by better government performance in delivering services and greater transparency about how tax revenues are used.

Source : africaneditors.com/ Eric Nii Sackey