Taxation, aid and democracy: The evolution of tax systems in Namibia, Tanzania and Uganda
Odd-Helge Fjeldstad
Lise Rakner
International Centre for Tax and Development (ICTD)
This research programme analysed the evolution and performance of tax systems in three African countries, Namibia, Tanzania and Uganda, in order to seek a deeper understanding of the present tax system, how it came to be, and what historical, political, economic and institutional forces have shaped it. Options available for tax policy making and implementation were also explored in light of political, economic, and administrative constraints. With its multidisciplinary design, primarily based in the disciplines of economics and political science, the programme helped to generate new insights on taxation in poor aid-dependent countries which are relevant for future tax reforms. Among the key findings are: (i) Rather than politically negotiated contracts about services in exchange for taxes between citizens and rulers (''democracy''), it is coercion, conflicts, and methods of tax collection that are central for the size of revenue mobilisation in poor countries. (ii) Administrative problems and political interference in the actual implementation of tax policies are often bigger obstacles to increased revenue than lack of political will to change tax policy. (iii) Given that central government taxes in the poorest countries only affect a relatively small number of people directly, while local government taxation has a much greater impact on individuals, the latter is central to a better understanding of state-citizen relations to the extent that such relations are influenced by taxation, which is the historical experience in Western countries.
