There are at least four reasons why African tax responses to Covid-19 should de-emphasise tax relief, and place greater priority on raising revenue from rich individuals:
The limited reach of formal tax systems: Formal tax systems in Africa have a comparatively limited reach among individuals and businesses.
Four more concrete strategies may be useful in guiding government efforts:
Start with existing, under-utilised taxes on personal income and property
We have ample evidence that the majority of the rich across Africa pay far less personal income tax (PIT) and property taxes than they should under the law.
Increasing enforcement by targeting the rich that are already in the tax net will miss the many (often richest) taxpayers who are not registered at all, or whose incomes are almost entirely unrecorded, for reasons of politics or weak administration.
Focusing on existing taxes like PIT and property tax avoids the political and administrative complexities of broader changes, and the risk that new taxes will either not be enforced, or will be enforced only on a narrow segment of the rich.
Build public trust: Public support for taxing the rich - including from the rich themselves - has remained low in part because taxpayers do not trust tax systems, or that revenues will be used well.
