Building taxpayer culture in
Mozambique, Tanzania and Zambia
Odd-Helge Fjeldstad
Chr. Michelsen Institute & International Centre for Tax and Development
www.CMI.no & www.ICTD.ac
Oslo, 15 November 2012
1
Purposes of the study:
(1) Examine strategies and measures on how to
build taxpayer cultures through constructive
engagement between governments and citizens
over tax issues in Mozambique, Tanzania and
Zambia
(2) Advice the authorities on how this knowledge
can be translated into practical, effective and
concrete development policies
Non compliance
Deliberate
fraud
Deliberate fraud
General
General
non-compliant
non-compliant
Attempt to comply,
but fail
Attempt to
comply, but fail
Compliant
Compliant
Voluntary compliance
Is it right or wrong not to pay taxes?
(Afrobarometer 2011/12)
60
54
51
49
50
46
46
40
37
33
Not wrong at all
35
32
31
Wrong, but understandable
30
Wrong and punishable
20
20
Don't know
19
11
10
10
6
5
4
2
5
5
0
Kenya
Tanzania
Zimbabwe
Uganda
South Africa
Tanzania: 3 citizen surveys
Why do people pay taxes? Changes over time
They have no
opportunity to
evade
They anticipate
Why do people pay taxes?
public services
They feel
obligations
towards the
government
They will avoid
disturbances
Others
Don’t know
2003
9,9
2006
12,3
2009
7,5
22,6
50,4
52,7
9,6
11,6
9,0
45,6
14,1
24,1
3,9
8,4
3,5
8,1
0,9
5,9
In your experience, how easy or difficult is it to find out what
taxes and fees your are supposed to pay to the government?
(Afrobarometer 2011/12)
80
73
73
73
70
63
60
50
%
44
Easy
40
35
Difficult
Don't know
30
20
23
21
18
20
19
14
9
10
8
5
0
Kenya
Tanzania
Zimbabwe
Uganda
South Africa
How do taxpayers perceive the Tax Agency?
Factors influencing taxpayer behavior
1.
Opportunities
2.
Economic deterrence
3.
4.
5.
•
•
•
•
•
•
•
•
•
•
Perceived probability of detection and size of sanctions
Affordability
‘Tax burden’
Compliance costs
Benefits of registering as taxpayer
Perceptions of the tax system’s fairness
Provision of services in return for taxes paid
Practises/procedures for revenue collection
Comparative treatment
Others’ tax behaviour
Tax moral
Personal norms
Social norms
Areas for interventions to build taxpayer culture
Tax policy
• Legislation:
party info
• PP-consultations
• Tax incentives/exemptions
3rd
Tax adm.
• Enforcement
• Foster compliance
• Technical capacity
Factors outside the tax system
•
•
Linking tax & public expenditure
Broader citizen engagement
Building taxpayer culture: Implications for policy
1. Strengthen tax policy making
•
TA to Min. of Finance: legislation & analytical capacity (e.g. 3rd part info.)
•
Advisory, training and research support to Parliamentarians
•
Document the extent and costs of tax exemptions
2. Develop tax administrative capacity
• Better understanding of taxpayers: foster compliance, not simply enforce
• Build expertise on specialised tax audit functions
• Strengthen analytical capacity of the tax adm’s
3. Create broader citizen engagement around taxation
• More emphasis on the ‘demand side’ to strengthen citizen engagement
• A broader approach than natural resource taxation
• Build local research capacity (domestic research institutions)
• Inspire students to focus on tax topics (TJN)
4. A general warning for donor assistance
• Avoid unhealthy ‘competition’ among development agencies
• Donor coordination and cooperation should be emphasised
“In a society where tax morale is high, there are
low levels of tax evasion and avoidance. It is
only in a social culture where citizens
generally appreciate their responsibility for
sustaining state services and where they have
a trust in their state institutions and leaders
that a tax moral evolves”
ADB (2010: 6)
Rwanda Case Study
THANK YOU FOR YOUR ATTENTION!