Sub-Saharan African countries could increase tax revenue by usually 5% of gdp — much more than they receive in international aid – as long as they reform their tax policies, the International Monetary Fund (IMF) said.
Key steps would be to strengthen value-added tax systems, streamline exemptions and expand coverage of greenbacks taxes, the Washington-based IMF said included in the regional economic outlook released Tuesday. Developing new revenue sources, which include property levies, and employing technology that can ensure admission to more straight answers would also help, it said.
Despite substantial progress in revenue mobilisation within the last few 2 full decades, sub-Saharan Africa continues to be region with all the world’s lowest ratio of revenue to GDP, the IMF said. Its average tax frontier — or highest standard of tax income than a country could achieve given certain underlying macroeconomic and institutional conditions – concerns 7.5 percentage points of GDP below what the average throughout the modern world.
“Domestic revenue mobilisation is probably the most pressing policy challenges” in your community, the IMF said. There exists “considerable possibility to collect higher taxes through reforms,” it said.
Nigeria, Africa’s most-populous nation approximately 200 million people, provides a tax-to-GDP ratio of 5.9%, the minimum on the list of sub-Saharan countries the IMF has measured. That compares with 24.7% for Nigeria, in line with the lender. The 2 main economies vie being the region’s biggest.
Nigeria could double its tax-to-GDP ratio with reforms to further improve efficiency, the IMF said. The country desires to twice the proportion by 2020 and definately will take defaulters that do not readily amnesty to court, Finance Minister Kemi Adeosun said from a January interview.
Countries which include Angola, Comoros, Guinea-Bissau and Liberia should look into replacing general sales tax with value-added tax, which imposes duties to the useful every stage from the supply chain and avoids double payments, the IMF said.
? 2018 Bloomberg?