Taxes alone will not close the wealth gap in Africa

Subject

Taxation effects on inequality in Africa.

Significance

Economic inequalities in African countries have failed to decline significantly despite gradual growth in per capita GDP over the past several years. Progressive taxation is weak in many countries, but improving this source of revenue alone will not close the inequality gap for some of the world's poorest.

Impacts

• Political patronage and fear of elite emigration will discourage politicians from proposing progressive taxes.
• If introduced, higher taxes would only reduce inequality if collected transparently and invested in services for those with low incomes.
• Low income tax rates will limit revenue flows to fund major infrastructure projects, especially if other revenue sources are depressed.