Improving the efficiency to boost tax revenue

Improving the efficiency to boost tax revenue

Improving taxation efficiency

How can African countries raise more tax revenue without putting off investors? Logan Wort executive secretary of the African Tax Administration Forum (ATAF) shares his insights.

What are some of the best and most feasible ways Africa’s revenue authorities can raise income?

This is not just a question of what African tax authorities can do to collect the appropriate taxes, it is also a question of ensuring that countries have the right tax policies in place. This means tax policies that ensure a broad tax base, the right mix of different tax types and appropriate tax rates that all contribute to reaching the tax potential of individual African countries.

Having a transparent, efficient and effective tax system is crucial to tax administrations’ efforts to collect the appropriate amount of tax and close the tax compliance gap between the tax due under the prevailing tax regime and the tax actually collected. If Africa is to stem illicit financial flows (IFFs) arising from tax avoidance and evasion it needs to redesign its tax policies and build the capacity of African tax administrations.

Africa must look closely at its policies for granting tax incentives. There is substantial tax lost in Africa through harmful tax competition and the granting of wasteful tax incentives due to a lack of accountability and robust cost benefit analysis to measure the effectiveness of these incentives. There is a need to create greater political awareness of the tax impact of these incentives.

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