Tax mobilization in sub-Saharan Africa : Do illicit financial flows matter?
Keywords:
tax burden, illicit financial flows, VAT gapAbstract
The objective of this paper is to analyze the contribution of illicit financial flows to the differences in tax rates in sub-Saharan Africa. Our sample contains 18 cooperative countries and 12 non-cooperative countries with respect to the Anti-Money Laundering / Countering the Financing of Terrorism. Using the Oaxaca-Blinder decomposition, we find that the difference in illicit financial flows explains the differences in tax burden.
References
Aaskoven, L. (2018). Budget institutions and taxation. Public Choice, 174(3-4), 335-349. Agha, A., & Haughton, J. (1996). Designing VAT systems: Some efficiency considerations. The Reviews of Economics and Statistics, 78(2), 303-308.
View in Google Scholar
Ajaz, T., & Ahmad, E. (2010). The effect of corruption and governance on tax revenues. The Pakistan Development Review, 49(4), 405-417.
View in Google Scholar
Attila, G., Chambas, G., & Combes, J. L. (2009). Corruption et mobilisation des recettes publiques : une analyse économétrique. Recherches Économiques de Louvain, 75(2), 229-268.
View in Google Scholar
Bahl, R. W. (1971). A regression approach to tax effort and tax ratio analysis. (International Monetary Fund Staff Paper No. 18, 570-612).
View in Google Scholar
Baker, R. W. (2005). Capitalism’s Achilles heel: Dirty money and how to renew the free-market system. Hoboken: John Wiley & Sons.
View in Google Scholar
Barbone, L., Bird, R. M., & Vazquez-Caro, J. (2012). The costs of VAT: A review of the literature. (CASE Network Reports No. 106, 2-66).
View in Google Scholar
Baum, A., Hodge, A., Mineshima, A., Badia, M. M., & Tapsoba, R. (2017). Can they do it all? Fiscal space in low-income countries. (IMF Working Paper No. 110).
View in Google Scholar
Bekoe, W., Danquah, M., & Sampson, K. S. (2016). Tax reforms and revenue mobilization in Ghana. Journal of Economic Studies, 43(4), 522-534.
View in Google Scholar
Blinder, A. S. (1973). Wage discrimination: Reduced form and structural estimates. The Journal of Human Resources, 8, 436-455.
View in Google Scholar
Bogetić, Z., & Hassan, F. (1993). Determinants of value added tax revenue: A cross section analysis. (World Bank Policy Research Paper No. 1203).
View in Google Scholar
Caldeira, E., Compaoré, A., Dama, A. A., Mansour, M., & Rota-Graziosi, G. (2020). Tax effort in sub-Saharan African countries: Evidence from a new dataset. (Études et Documents, No. 2, CERDI).
View in Google Scholar
Carfora, A., Pansini, R. V., & Pisani, S. (2018). Spatial dynamic modelling of tax gap: The case of Italy. European Spatial Research and Policy, 25(1), 8-28.
View in Google Scholar
CASE. (2017). Study and reports on the VAT gap in the EU-28 Member States. Final Report. Warsaw : Directorate General Taxation and Customs Union.
View in Google Scholar
Castro, G. A., & Camarillo, D. B. R. (2014). Determinants of tax revenue in OECD countries over the period 2001-2011. Contaduría y Administración, 59(3), 35-59.
View in Google Scholar
Combes, J. L., Minea, A., & Sawadogo, P. N. (2019). Assessing the effects of combating illicit financial flows on domestic tax revenue mobilization in developing countries. (Études et Documents, No. 7, CERDI).
View in Google Scholar
D’Agosto, E., Marigliani, M., & Pisani, S. (2014). Asymmetries in the territorial VAT gap. Argomenti di Discussione of Italian Revenue Agency, 2.
View in Google Scholar
Ebeke, C., Mansour, M., & Rota-Graziosi, G. (2016). The power to tax in sub-Saharan Africa: LTUs, VATs, and SARAs. (Études et Documents, No. 11, CERDI).
View in Google Scholar
Even, W. E., & Macpherson, D. A. (1990). The gender gap in pensions and wages. Review of Economics Statistics, 72(2), 259-265.
View in Google Scholar
Even, W. E., & Macpherson, D. A. (1993). The decline of private sector unionism and the gender wage gap. Journal of Human Resources, 28(2), 279-296.
View in Google Scholar
FMI. (2017). World Economic Outlook. Retrieved from https://www.imf.org/en/publications/sprolls/world-economic-outlook-database.
View in Google Scholar
Fontana, A. (2010). What does not get measured, does not get done : The methods and limitations of measuring illicit financial flows. Bergen : U4 Anti-Corruption Resource Centre.
View in Google Scholar
Fuest, C., & Riedel, N. (2009): Tax evasion, tax avoidance and tax expenditures in develop- ing countries: A review of the literature. Report prepared for UK DFID. Oxford: Oxford University Centre for Business Taxation.
View in Google Scholar
Gaspar, V., Jaramillo, L., & Wingender, P. (2016). Tax capacity and growth: Is there a tipping?. (FMI, Working Paper No. 234).
View in Google Scholar
Groupe de haut niveau sur les flux financiers illicites en provenance d’Afrique. (2015). Les flux financiers illicites en provenance d’Afrique. Nations Unies, Commission Economique pour l’Afrique. Retrieved from https://hdl.handle.net/10855/22692
View in Google Scholar
Gupta, A. S. (2007). Determinants of tax revenue efforts in developing countries. (IMF Working Paper, No. 184).
View in Google Scholar
Hollingshead, A. (2010). The implied tax revenue loss from trade mispricing. Washington: Global Financial Integrity.
View in Google Scholar
Houssa, R., Megersa, K., & Nikiema, R. (2017). The sources of VAT gaps in WAEMU: Case studies on Benin and Burkina Faso. (Centre of Research in the Economics of Development (CRED), University of Namur, No. 22).
View in Google Scholar
International Centre for Tax and Development. (2018). Government revenue dataset. Online database.
View in Google Scholar
Kaldor, N. (1963). Will underdeveloped countries learn to tax? Foreign Affairs, 41(2), 410-419. Kar, D., & Cartwright-Smith, D. (2010). Illicit financial flows from Africa: Hidden resources for development. Global Financial Integrity. Retrieved from https://gfintegrity.org/report/briefing-paper-illicit-flows-from-africa/
View in Google Scholar
Kar, D., & LeBlanc, B. (2013). Illicit financial flows from developing countries: 2002-2011. Global Financial Integrity. Retrieved from https://gfintegrity.org/report/2013-global-report-illicit financial-flows-from-developing-countries-2002-2011/
View in Google Scholar
Kar, D., & Spanjers, J. (2014). Illicit financial flows from developing countries: 2003-2012. Global Financial Integrity. Retrieved from https://gfintegrity.org/report/2014-global-report-illicit-financial-flows-from-developing-countries-2003-2012/
View in Google Scholar
Karagöz, K. (2013). Determinants of tax revenue: Does sectorial composition matter?. Journal of Finance, Accounting and Management, 4(2), 50-63.
View in Google Scholar
Kasnauskienė, G., & Krimisieraitė, J. (2015). Using MIMIC models to examine determinants of VAT gap in Lithuania. Organizations and Markets in Emerging Economies, 6(1), 107-126.
View in Google Scholar
Keen, M., & Mansour, M. (2010). Revenue mobilization in sub-Saharan Africa: Challenges from globalization I-Trade reform. Development Policy Review, 28(5), 553-571.
View in Google Scholar
Lotz, J. R., & Morss, E. R. (1970). A theory of tax level determinants for developing countries. Economic Development and Cultural Change, 18(3), 328-341.
View in Google Scholar
Majerová, I. (2016). The impact of some variables on the VAT gap in the Member States of the European Union. Oeconomia Copernicana, 7(3), 339-355.
View in Google Scholar
Mallaye, D., & Yogo, U. T. (2015). Hétérogénéité des effets de l’aide sur la croissance économique en Afrique subsaharienne : Evidences comparatives entre pays stables et pays en poste conflit. African Development Review, 27(3), 216-229.
View in Google Scholar
Mascagni, G. (2016). Aid and taxation in Ethiopia. The Journal of Development Studies, 52, 1744-1758.
View in Google Scholar
Moore, M. (2007). How does taxation affect the quality of governance?. (IDS Working Paper No. 280).
View in Google Scholar
Moore, M. (2013). Obstacles to increasing tax revenues in low income countries. (ICTD Working Paper No. 15).
View in Google Scholar
Oaxaca, R. (1973). Male-female wage differentials in urban labor markets. International Economic Review, 14, 693-709.
View in Google Scholar
Reckon, L. L. P. (2009). Study to quantify and analyse the VAT gap in the EU-25 Mem- ber States. Directorate General Taxation and Customs Union, European Commission. Retrieved from http://ec.europa.eu/taxation_customs/resources/documents/taxation/ tax_cooperation/combating_tax_fraud/reckon_report_sep2009.pdf
View in Google Scholar
Shin, K. (1969). International difference in tax ratio. The Review of Economics and Statistics, 51, 213-220.
View in Google Scholar
Spanjers, J., & Salomon, M. (2017). Illicit financial flows to and from developing countries: 2005-2014. Global Financial Integrity. Retrieved from https://gfintegrity.org/report/illicit-financial-flows-to-and-from-developing-countries-2005-2014/
View in Google Scholar
Szczypińska, A. (2019).What drives the VAT gap in the European Union?. (MF Working Paper series N°34).
View in Google Scholar
World Bank. (2018a). World Development Indicators. Online database. World Bank. (2018b). World Governance Indicators. Online database.
View in Google Scholar
Yun, M. S. (2004). Decomposing differences in the first moment. Economics Letters, 82, 275-280.
View in Google Scholar
Zídková, H. (2014). Determinants of VAT gap in EU. Prague Economic Papers, 4, 514-530. Zidková, H., & Pavel, J. (2017). What causes VAT gap?. Ekonomický časopis, 64(9), 811-826.
View in Google Scholar
Downloads
Published
Issue
Section
License
Copyright (c) 2021 Poznań University of Economics and Business
This work is licensed under a Creative Commons Attribution 4.0 International License.
