Africa can raise $469bn without tax hikes – AfDB

Africa can unlock more than $469bn in additional annual revenue without raising statutory tax rates, according to the African Development Bank.

The Chief Economist and Vice President for Economic Governance and Knowledge Management at the African Development Bank, Prof. Kevin Urama, said this in an interview with the News Agency of Nigeria on Wednesday in Abuja.

He said the additional revenue could be mobilised without increasing tax rates, stressing that stronger domestic resource mobilisation remained the most sustainable source of development financing for the continent.

According to him, improving tax administration through digitalisation, strengthening public institutions, and enhancing service delivery would significantly increase tax compliance.

“We see that by improving tax administration through digitisation and other reforms, just adopting best practices, the continent can mobilise more than $469bn extra without increasing tax rates.

It is simply about improving efficiency and strengthening compliance,” he said.

Urama said many citizens were reluctant to pay taxes because they often had to provide essential services such as electricity, water, and road infrastructure for themselves.

He noted that governments could improve voluntary tax compliance by delivering quality public services, strengthening transparency, and ensuring prudent management of public resources.

The economist said the AfDB was supporting African countries, including Nigeria, to strengthen domestic revenue mobilisation through capacity building for national revenue authorities.

He added that the bank had also developed a Public Service Delivery Index to encourage governments to improve service delivery and strengthen the social contract between citizens and the state.