African Tax Administration Paper 38
Tax specialists have a great deal to say about how African tax collectors could work better. But they rarely seem to ask the tax collectors themselves. This paper reports from what we believe to be the first such survey. A random selection of 83 staff members working on domestic taxes at the Malawi Revenue Authority, equally divided between senior, supervisory, and junior categories, were asked to respond to a series of written questions to elicit their views on how the Revenue Authority could collect more revenue. The survey was an experiment.
Two of the conclusions that emerge concern future research directions. One is that it is worth doing more of this kind of research, probably supplementing survey responses with more detailed focus group discussions. The other is that the perceptions of (lower ranking) tax collectors can supplement but not substitute for more expert judgements. Quite understandably, our (more junior) respondents generally answered questions about how to raise more revenue based on their often narrow and specific job roles and work experience. They are not best placed to recognise systemic problems or opportunities. For example, while senior staff identified the potential for raising more revenue from high net worth individuals (HNWIs), supervisory and junior staff saw more potential in the ‘informal sector’. The latter were also more concerned about the late filing of tax returns.
The most policy-relevant conclusion concerns ways of more effectively taxing the informal sector. Our respondents pointed to a range of (lucrative) activities – like event planning and catering, used car dealers, hiring out private cars, foreign exchange trading, and moneylending – that avoid taxes because they are not run from identifiable business premises. They could, however, easily be traced and taxed because they have a significant social media presence.
Finally, we were left with a tantalising suggestion from one of our more senior respondents that merits further research. It is possible that African governments raise less revenue than they could because the relationship between ministries of finance and tax collecting agencies is marked by tension and distrust. The tax collecting agencies negotiate annual collection targets that are easily achievable. When these have been achieved they trigger the payment of large bonuses to the collection staff, and these staff then have little incentive to collect more.
