Resource Dependence and Fiscal Effort in Sub-Saharan Africa

20 Pages Posted: 26 Sep 2013

See all articles by Juan Treviño

Juan Treviño

International Monetary Fund (IMF)

Alun H. Thomas

International Monetary Fund (IMF) - European Department

Date Written: August 2013

Abstract

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.

Keywords: Revenue sources, Sub-Saharan Africa, Natural resources, Tax revenues, Taxation, Tax law, taxation, exhaustible resources, resource rich, oil, resource booms

JEL Classification: H10, H20, H30, H50, Q30, Q33, Q38

Suggested Citation

Treviño, Juan and Thomas, Alun, Resource Dependence and Fiscal Effort in Sub-Saharan Africa (August 2013). IMF Working Paper No. 13/188, Available at SSRN: https://ssrn.com/abstract=2331323

Juan Treviño

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Alun Thomas

International Monetary Fund (IMF) - European Department ( email )

700 19th Street NW
Washington, DC 20431
United States

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