Resource Dependence and Fiscal Effort in Sub-Saharan Africa

August 28, 2013

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Alun H. Thomas, and Juan P Trevino. Resource Dependence and Fiscal Effort in Sub-Saharan Africa, (USA: International Monetary Fund, 2013) accessed December 26, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

High natural resource prices in recent years have resulted in sizeable increases in fiscal revenue for many resource-exporting countries in sub-Saharan Africa. However, this revenue source is volatile, and arguably these countries should also rely on other forms of taxation to help fund public expenditure. This paper asks whether the availability of higher resource revenue in these countries has led to lower taxation effort of other revenue categories. The question is analyzed both in terms of the relationship between non-resource tax revenue and resource revenue, and between non-resource tax revenue and statutory tax rates. The paper finds evidence suggesting that nonresource revenue is negatively influenced by a higher resource revenue-to-GDP ratio. The lower take up of nonresource taxes in resource-rich countries is correlated with higher levels of corruption in these countries, suggesting weaker institutions affect nonresource revenue through incentives for tax evasion and/or large tax exemptions as argued in the literature.

Subject: Corporate income tax, Corruption, Crime, Environment, Natural resources, Revenue administration, Tax evasion, Taxes, Value-added tax

Keywords: Corporate income tax, Corruption, Exhaustible resources, Natural resource export, Natural resources, Oil, Resource, Resource booms, Resource country, Resource revenue, Resource rich, Revenue effort, Revenue ratio, Sub-Saharan Africa, Tax law, Taxation, Value-added tax, WP

Publication Details

Pages:

19
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2013/188
Stock No:

WPIEA2013188
ISBN:

9781484391501
ISSN:

1018-5941

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