Predatory taxation
TWENTY-FIVE IMF programmes, and at least 17 high-powered tax reform commissions, task forces and donor-funded programmes later, the country still finds itself struggling to raise revenue. Once again, another government has announced its intention to raise the tax-to-GDP ratio. The pattern of repeated failure over decades should be a moment for pause and introspection — both for the government and the IMF. The need for additional revenue cannot be denied. Against an estimated tax revenue potential of around 20-22 per cent of GDP, government revenue totals 12.5pc of GDP, significantly below the average for low- and middle-income countries as a whole. Looked at from another perspective, the country is unable to fund its substantial spending needs with regards to public service delivery, ballooning pension liabilities or building climate resilience. Despite the imperative to raise revenue, the country’s tax effort has focused predominantly on a shrinking, already compliant formal sector....