Tax Revenue Instability in Sub-Saharan Africa: Consequences and Remedies
27 Pages Posted: 31 Jan 2013
Date Written: January 1, 2013
This paper focuses on the sources and consequences of the instability of tax revenue in Sub-Saharan African countries. We took advantage of a unique and extraordinarily rich dataset on the composition of tax revenues for a large number of countries. Using panel data for 37 countries observed over the period 1980-2005, our results are twofold. First, the instability of government tax revenue leads to the instability of both public investment and government consumption, and also reduces the level of public investment. Second, the reliance on domestic indirect taxation-based systems appears to have a robust stabilising effect.
Keywords: tax instability, tax composition, public spending, Sub-Saharan Africa
JEL Classification: H20, E32, O11
Suggested Citation: Suggested Citation