Tax Policy in Sub-Saharan Africa, Volume 19World Bank Publications, 1988 - 22 pages Trade is an essential driver for sustained economic growth, and growth is necessary for poverty reduction. In Sub-Saharan Africa, where three-fourths of the poor live in rural areas, spurring growth and generating income and employment opportunities is critical for poverty reduction strategies. Seventy percent of the population lives in rural areas, where livelihoods are largely dependent on the production and export of raw agricultural commodities such as coffee, cocoa, and cotton, whose prices in real terms have been steadily declining over the past decades. The deterioration in the terms of trade resulted for Africa in a steady contraction of its share in global trade over the past 50 years. Diversification of agriculture into higher-value, non-traditional exports is seen today as a priority for most of these countries. Some African countries-in particular, Kenya, South Africa, Uganda, CÔte d'Ivoire, Senegal, and Zimbabwe-have managed to diversify their agricultural sector into non-traditional, high-value-added products such as cut flowers and plants, fresh and processed fruits and vegetables. To learn from these experiences and better assist other African countries in designing and implementing effective agricultural growth and diversification strategies, the World Bank has launched a comprehensive set of studies under the broad theme of "Agricultural Trade Facilitation and Non-Traditional Agricultural Export Development in Sub-Saharan Africa." This study provides an in-depth analysis of the current structure and dynamics of the European import market for flowers and fresh horticulture products. It aims to help client countries, industry stakeholders, and development partners to get a better understanding of these markets, and to assess the prospects and opportunities they offer for Sub-Saharan African exporters. |
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addition adjustment adminis administratively feasible amount of revenue asset broadbased Cameroon capital cedis commodity taxes company income company tax consumption tax costs of taxation Cote d'Ivoire countries in Sub-Saharan credits depreciation allowances domestic production domestic taxes economic costs elimination embryonic example excises expanding the tax export taxes full expensing Ghana implement incentives increase interest deductions international trade Kenya Malawi marginal rates marginal tax rates master tax file MEMRB ment Narvesen Nigeria nomic P.O. Box percent of total personal and company presumptive taxes proposals rate of taxation recommendations reduce relative result Saharan Africa sales tax sectors short run statutory rate Sub-Saharan Africa sumer sumption tax Swaziland Tax administration tax base tax effort tax reform tax revenue tax structure tax system taxation in Sub-Saharan taxation of domestic taxation of inputs Taxes on Domestic taxpayers tion tax total revenue trade taxes Uganda value-added tax withholding taxes World Bank zero METR Zimbabwe
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Page 7 - Malawi's surtax operate like consumption taxes through the import and manufacturing stages but not beyond. This discussion leads to one of the most important recommendations of this paper. Where "embryonic" consumption taxes are already in place, their role as a source of revenue should be increased at the expense of tariffs. In the short run, this could be achieved by means of an increase in the tax rate with a compensating reduction in tariff rates. In the long run, expansion in the base will allow...
Page viii - The development of the valueadded tax in the Ivory Coast illustrates this process. In 1960, the tax accounted for 15 percent of total revenue with 70 percent of its contribution coming from the taxation of imports. By 1982, the corresponding figures were 30 percent and 40 percent. Thus, the tax has increased in importance and an increasing share of its total revenue is coming from the taxation of domestic activities. Similar though slightly less dramatic changes occurred with the Malawian surtax....
Page 7 - Cote d'Ivoire, for example. An intermediate approach — part exemption, part crediting — has been introduced in Kenya. In this scheme, goods that are clearly intended for production such as major capital goods are exempt while other goods such as sewing machines or textiles which could be for final consumption or intermediate use are subject to the crediting system. This hybrid approach may be a convenient intermediate step in the move towards a genuine value-added tax. With existing administrative...
Page 7 - ... consumption tax. Taxation of inputs can be eliminated in several ways. Malawi's Surtax, for example, is based on the exemption principle. Registered producers — those paying Surtax on their output — are exempt from the payment of tax on their inputs. This scheme, generally described as a "ring" system, is probably the simplest to administer where the tax base is relatively small.
Page 8 - The taxation of inputs, however, distorts choice among inputs thereby impairing the efficiency of production in these sectors. Moreover, it reduces their competitiveness in export markets. As the tax system develops, however, it will be possible to extend the consumption tax along the production/distribution chain to the retail level and to include more and more enterprises and sectors. As this happens, the proportion of inputs subject to taxation will decline. In this way, the existing "embryonic...
Page 7 - ... embryonic" consumption tax. In still other countries, the only broadbased, domestic tax may be a turnover tax. Cameroon, for example, imposes a nine percent tax on all transactions. This tax implies the taxation of inputs which cascades through the production process and encourages vertical integration. In this case, movement to a consumption tax requires elimination of taxes on inputs and integration with the taxation of imports. Once again, however, the presence of a turnover tax provides the...
Page 7 - In the short run, this can be achieved by means of an increase in the consumption tax rate with a compensating reduction in tariff rates. In the long run, expansion in the base will allow further reductions in rates and cause an increasing amount of revenue to be generated from the taxation of domestic activities. The development...
Page 7 - Restructuring trade tariffs and domestic taxes to produce a broadbased consumption tax that is, or becomes, a major source of revenue should be the primary objective of tax reform in countries which do not already have an "embryonic
Page 8 - This reduces, but probably does not offset, the competitive advantage in the domestic market that the tax system would otherwise confer on those sectors whose output escapes taxation.