ISBN : 9780198844075
Most African countries are in dire need of more tax revenue. In 28 out of 45 countries with a value-added tax (VAT) total tax revenue as a percentage of GDP is around 15% or less, falling short of what is necessary to finance basic human and economic development. Far from being revenue-raising instruments, current African VATs are riddled with exemptions, exclusions, and zero rates on domestic goods and services that depress revenue, are highly distortionary, and greatly complicate the administration of VAT.
Modernizing VATs in Africa enables policy makers, professionals, and students to analyse African tax systems to ascertain how they can be modernized. It explains the case for VAT base-broadening over rate-increasing, arguing that exemptions and zero rates mainly accrue benefits for higher-income groups. Even more persuasively, it demonstrates that the net result of fiscal systems can be equalizing if the revenue of broad-based VATs is used to finance in-kind transfers, such as healthcare and education. VAT modernization should be used to enable governments to finance development; Modernizing VATs in Africa puts a compelling case forward for how and why this can be achieved.
1 Why VAT?
2 What is VAT?
3 Other Broad-Based Consumption Tax
4 Overview of VATs in Africa
5 Countries without VAT
6 Revenue Performance
7 VAT Incidence and Rate Structure
8 Economic Integration and Tax Coordination in Regional Economic Communities
9 Exemptions and Exclusions: The Achilles Heel of VAT
10 Non-Standard Exemptions and Zero Rates
11 Governments and Activities in the Public Interest
12 Immovable Property
13 Financial Services
15 Lotteries and Gambling
16 Small Businesses and Farmers
17 Basic Administrative Processes
18 Agenda for VAT Modernization
A Africa: VAT Treatment of Essential Goods and Services, 2018
B Africa: VAT and Excise Tax Treatment of Selected Goods and Services, 2018
C Africa: Sales Taxes and Excise Systems in Non-VAT Countries, 2018
D Africa: Basic Economic and Institutional Indicators in VAT Countries, 2016