Donor support for tax administration reform in Africa: experiences in Ghana, Tanzania, Uganda and Zambia

Abstract

"Tax administration reforms are of prime importance for strengthening fiscal state and governance relations in developing countries. African countries have been particularly deficient in this respect. Donor support for tax administration reform in Africa therefore might have a strong impact in enhancing the developing prospects of the continent. This study analyses the experiences gathered to date with donor support for tax administration reform in four African countries: Ghana, Tanzania, Uganda and Zambia. With strong assistance, all have established semi-autonomous revenue agencies. The study assesses their capacity to collect and process taxpayer information, their merit orientation in the area of human resource management, their relationships with other state organisations and donors, their tax structures and exemptions, and, finally, their revenue performance. One special focus area is the political and socio-economic environment in which the reform projects are embedded. The aim is to draw lessons from the case studies' different trajectories for future donor assistance. The two main recommendations presented here are: First: a broadening of donor support beyond administrative issues. This entails systematic cooperation with civil society stakeholders and a strengthening of the Ministry of Finance's capacities. Second: ensuring the sustainability of tax administration reforms. Flexible donor conditionality, not purely focussed on the tax-to-GDP ratio and on fulfilling revenue targets, as well as coherent and needs-based technical support are prime means for enhancing the prospects of partner countries' consistent commitment to tax administration reform." (author's abstract)