Frizell, J. (2024). Rallying Fiscal Patriotism: War Taxes in the Contemporary World. Comparative Political Studies, 57 (8), 1275 – 1405.
Summary: Constituting a central historical link between war and long-term fiscal capacity, war taxes are generally perceived to be a thing of the past. This article corrects the picture by presenting new, global data on war taxes, 68 in total, introduced between 1960 and 2020. Far from having been abandoned, war taxes have remained a crucial war-time fiscal instrument, leaving long-term imprints on tax systems across the contemporary world. Serving the twin imperatives of revenue maximisation and generation of taxpayer consent, I argue that the use of war taxes is conditioned by the relative intensity and the perceived legitimacy of a war, be it civil or inter-state. The proposed logic aligns with case evidence, further supported by macro-quantitative analysis. The results speak to the large literature on war and state-building, challenge the standard disintegrative view of civil wars, and provide new empirical insights into the political economy of conflict-affected countries.
Afrobarometer (2024). African Insights 2024: Democracy at risk – the people’s perspective.
Summary: Africa’s democratic project faces challenging times, overshadowing ruling-party transitions, the ouster of long-sitting presidents, and other democratic advances, and fuelling warnings that democracy is losing ground on the continent.
Afrobarometer has documented the democratic aspirations and experiences of African citizens for the past 25 years. This report, the first in what will be an annual series on high-priority topics, distills findings from data spanning more than a decade, including our latest round of nationally representative surveys in 39 countries. In a nutshell: Africans want more democratic governance than they are getting, and the evidence suggests that nurturing support for democracy will require strengthening integrity in local government and official accountability.
Boas, Johannesen, Kreiner, Larsen & Zucman (2024). Taxing Capital in a Globalized World: The Effects of Automatic Information Exchange. EU Tax Observatory Working Paper No. 24.
Summary: In the second half of the 2010s more than 100 countries—including all large offshore financial centers—started to automatically exchange bank information with foreign tax authorities. This informational big-bang marks a break with the situation of offshore bank secrecy that prevailed before. We study its effects on tax compliance by analyzing the universe of information reports sent by foreign banks to Danish authorities, matched to population wide micro-data on income, wealth, and cross-border bank transfers. In response to the automatic exchange of bank information, tax evaders may repatriate previously undeclared offshore wealth, they may start to self-report offshore income to the tax authorities, or the tax authorities may detect their evasion in audits that use the new information reports. Using a variety of research designs, we find large compliance effects along all these margins, with the largest response coming from repatriation of wealth. Overall we estimate that the automatic exchange of bank information has closed about 70% of the offshore tax gap. These results highlight the power of international cooperation to improve tax compliance: tax evasion is not a law of nature in a globalized world.
Axelson, Hohmann, Pirttilä, Raabe & Riedel (2024). Taking top incomes in the emerging world. WIDER Working Paper 2024/37.
Summary: Rising levels of income inequality and tight government budgets have spurred discussions in many developing nations about how to appropriately tax high-income earners. In this paper, we study taxpayer responses to an increase in the top marginal tax rate in South Africa, drawing on exceptionally rich tax administrative data and a transparent empirical identification design. We establish that treated taxpayers strongly reduce their reported taxable income in response to the tax reform. Taxpayers’ responses are driven by both reductions in broad income and increases in tax deductions. While regular labour earnings remain unaffected, we find a marked drop in non-monetary wage components and annual incentive and bonus payments. Linking individual to corporate tax returns, we show that part of the observed response reflects adjustments in real economic activity: South African firms, which employ treated workers, experience a decline in output after the reform.
Le, Kumar & Ozer (2024). Tax Expenditure Manual. World Bank Group.
Summary: Tax expenditures have been at the forefront of policy discussions on tax reforms. Recent global developments including the agreement on Global Minimum Tax (2021) and United Nations initiative to align tax expenditures with sustainable development goals (2021) have provided a fresh impetus to the discussions. Following the Paris agreement on climate change (2015) to contain global warming, countries have also agreed at COP26 (2021) and COP27 (2022) to accelerate efforts to phase-out of inefficient fossil fuel subsidies, significant proportion of which are forgone consumption taxes (IMF, 2021). Along with these developments, global economic crisis precipitated by the pandemic and ongoing conflicts has pushed many countries into fiscal stress, particularly those with low revenue mobilization levels. Since tax expenditures are a leading cause for low fiscal effort for many developing economies, their reform has emerged as one of the key policy options to enhance domestic revenue mobilization.
Asante, Kumi & Kodom (2024). Post-COVID economic crisis, citizen-state relations, and the Electronic Transactions Levy (E.Levy) controversy in Ghana. World Development Perspectives.
Summary: In 2021, the Government of Ghana sparked controversy by introducing the Electronic Transactions Levy (E-Levy) as part of an aggressive programme of revenue mobilisation in response to the debt-induced economic crisis that swept through the Global South in the wake of the COVID-19 pandemic. This paper contributes to the literature on the politics of economic crisis by demonstrating the consequences of prioritising revenue mobilisation over social protection during times of economic shocks. Drawing on in-depth interviews with a range of respondents, we argue that the outrage triggered by the introduction of the E-levy was rooted in longstanding grievances against the lack of reciprocity in citizen-state relations and an apparent breakdown of the fiscal contract. The tax provoked denunciatory narratives of economic mismanagement and government insensitivity, thereby underscoring the crisis of political legtimacy in Ghana. By ‘loosening the safety net’ and ‘tightening the tax net’ at a time when the country was battling an economic crisis and still grappling with the fallouts of the COVID-19 pandemic, the government created the conditions that exacerbated the already fraught citizen-state relations. Given the low tax morale, citizens are actively adopting various strategies to avoid paying the tax, including reverting to the use of cash and reducing the value and frequency of transactions.
Gwaindepi (2023). Taxation in Africa since colonial times. In The History of African Development, edited by Frankema, Hillbom, Kufakurinani & Selhausen.
Summary: Taxation is the primary way governments raise the revenue needed to fund public goods and services such as health care, education, and infrastructure, and to maintain law and order. African countries raise very low tax revenues today and lag behind other regions, also compared to other developing regions such as South Asia, Southeast Asia and Latin America. It is expected that low-income countries raise low absolute amounts of tax revenues compared to rich countries, but the issue is that African countries also raise a smaller proportion of revenue as shares of their incomes than other regions. The Gross Domestic Product (GDP) shows the monetary value of the national output of goods and services each year, and it is usually treated as a reasonable proxy for the tax base of each country. Since the 1980s, Africa’s average tax to GDP share has barely reached 15 percent, while it is around 21 percent in Latin American countries and above 34 percent in high-income countries. Policy and research debates continue to seek an understanding of why African governments perform relatively poorly in raising taxes.
