5. Conference, Report & Working Papers
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Item Tax Awareness and Fiscal Workarounds in Contemporary Kenya: Reactions Towards New Taxation Laws, and the Need to Renew the Social Contract(Institute of Development Studies, 2024-10) Magale, Eric; Schmidt, MarioThis working paper highlights the awareness and perception of taxes among ordinary Kenyans, with a particular focus on how they situate taxes in their wider universe of obligatory payments. The paper first describes how Kenyans understand the nature, social meaning, and importance of taxes and how these understandings changed during our research, which took place shortly after the enactment of the unpopular Finance Act 2023. The temporal proximity between the period of our data collection and the enactment of this law provided a rare and unique lens for a study of how ordinary citizens view taxes. Apart from exploring how rising taxes on digital financial services influenced economic behaviour among Kenyans occupying different economic classes, the paper also describes how these Kenyans increasingly made use of ‘fiscal workarounds’ to strategically avoid taxes whereby they clearly positioned themselves against some of the unpopular taxes forced down on them, citing the high cost of living and waning public confidence in the political leadership as their reasons. We conceptualise ‘fiscal workarounds’ as the idea that citizens do not simply accept or reject taxes but rather engage in practices that redefine, revise (albeit theoretically) and resist taxes depending on how they experience them. Although not novel, these ‘fiscal workarounds’ were now increasingly justified by citizens who pointed to the political elite’s failure to fulfil their part of the social contract. The paper concludes by offering insights for policy adjustments that could help renew the social contract between Kenyan taxpayers and government as their agents.Item The Potential of Digital ID Systems for Tax Administration: The Case of Ghana(2024-12) Santoro, Fabrizio; Scarpini, Celeste; Okiya, StephenDigital identification systems (DIS) have great potential for strengthening tax administration. This paper examines the practical implications of integrating DIS with tax administration in Ghana. Studying system integration and data sharing between the Ghana Revenue Authority and the National Identification Agency, we evaluate the impact of replacing taxpayer identification numbers (TINs) with personal identification numbers (PINs) linked to a Ghana Card. By analysing administrative data and surveying 1,000 businesses in Accra, the study investigates registration patterns, tax perceptions and outcomes, and assesses improvements in data quality post-integration. The findings reveal a significant increase in the number registered for tax following system integration, particularly female and younger taxpayers. The impact on revenue is uncertain, and there is mixed compliance observed for PIN-based registrations. Those registered for tax for the first time after integration perform much worse than taxpayers who were migrated from TIN to PIN. Tax payment significantly improves for PIN-based registrations, mainly due to the technical design of the e-payment platform. While integration improves data on taxpayers' addresses, it worsens that on the economic sector. The study also shows that there is no significant improvement in taxpayers’ attitudes and perceptions, despite simplified registration processes.Item Taxation of Fisheries in Kenya: Neither Improving Management nor Raising Revenue?(Institute of Development Studies, 2024-08) Occhiali, Giovanni; Okello, OliviaThe Kenyan government believes fisheries have significant potential for development. Yet their development faces many challenges – some of which are connected to a lack of the data needed to ensure their effective management. We do not, for example, have reliable information on the total annual catch. It is therefore impossible to establish whether the existing system of levies and charges is broadly right from the perspective of revenue collection and long-term sustainability of fisheries. This study uses a review of guiding legal documents, in-depth interviews, and analysis of data on domestic taxes collected by the Kenya Revenue Authority. We conclude that the current taxation of fisheries in Kenya does not contribute to either their effective management or generating revenue. This is due to a combination of: (a) a fragmented regulatory and legislative environment, leading to unclear institutional mandates; (b) the inappropriate use of levies and charges purely to raise revenue rather than to ensure sustainable harvests; (c) little attention to sector compliance with general tax obligations, including registration, filing, and payment of taxes such as income tax or value added tax (VAT). These problems are deep-rooted, and connected to the existing legal, institutional, and operational framework. There are some immediate policy steps that could be taken to realise more of the potential for development of the sector. These include ensuring better coordination between national and county-level governments and institutions, and focusing efforts to enforce tax collection on the richest actors in the value chain.Item Taxing Mobile Money in Africa: Risk and Reward(International Centre for Tax and Development, 2024-07) International Centre for Tax and DevelopmentMobile money is a booming industry in Africa, with potential benefits for economic development and financial inclusion. Facing strong fiscal headwinds, a growing number of African countries have introduced taxes on mobile money and other digital financial services (DFS), some of which have generated strong resistance. Critics are concerned that such taxes may attenuate the growth in DFS and disproportionately impact the lowest income households. ICTD explored the impact of different approaches to DFS taxation in Africa through its DIGITAX programme, which ran from 2020 to 2024. The DIGITAX team and a network of independent researchers conducted research in Cameroon, Côte d’Ivoire, Ghana, Kenya, Nigeria, Tanzania and Uganda, as well as desk-based research with a broader geographical scope. This policy brief summarises the programme’s research findings and policy analysis.Item Are Trade Rules Undermining Taxation of the Digital Economy in Africa?(International Centre for Tax and Development (ICTD), 2024-02) International Centre for Tax and DevelopmentAfrican countries are currently considering provisions in the AfCFTA and at the WTO to liberalise digital trade. As they face mounting fiscal pressures, it is imperative that they beware the implications of digital trade provisions for their ability to tax their digital economy. In this paper, we develop a comprehensive framework for analysing the impact of trade rules on tax regimes in the digital economy, with a focus on Kenya, Rwanda, and South Africa. We explore how trade rules ostensibly shape tax policies and their implications for revenue generation. By examining rules regulating trade in services and the imposition of customs duties on electronic transmissions, we identify how these rules may directly impact tax policies and limit revenue generation possibilities. Moreover, digital trade rules, such as those related to data flows, localisation, and source code sharing, have the capacity to produce both indirect and administrative effects on tax measures. These rules can alter tax structures, taxation rights, data collection, and the capacity to monitor and implement tax measures. Our findings shed light on the complex interplay between trade rules and tax measures, highlighting potential challenges and opportunities for revenue generation from the digital economy in African countries.Item Building Trust and Tax Morale in Kenya’s Counties : An Evaluation of Participatory Budgeting(International Centre for Tax and Development (ICTD), 2024-07) Brian Wampler, Michael Touchton and Timothy KipronoThis study assesses the extent to which different types of public participation in budget processes are linked to attitudes and behaviour surrounding taxation in Kenya. Kenya’s 2010 constitution created subnational county governments, and devolved responsibility for many services to these governments. The constitution also requires public participation in budget processes to improve governance, service delivery, and development outcomes, but it does not specify what form this participation must take. Both devolution and public participation were also expected to improve tax morale and tax revenue through three stages. First, participation can theoretically generate perceptions of reciprocity and accountability among the public. Second, these two areas may combine to improve trust in government and tax morale, which then connect to broader tax compliance. Finally, more intensive, binding forms of participation are thought to generate a greater impact then less intensive forms of participation.