writes Abdul Malik Iddrisu
Africa-Press – Eswatini. People are less willing to pay taxes if they are concerned about state corruption. But resource rich countries with lower tax burdens have high compliance regardless of perceptions of graft.
Improving tax revenue is central to supporting the development efforts of African countries. However, there are significant barriers to improving a government’s ability to raise money across Africa. One of such barriers is taxpayers’ low levels of willingness to comply with their tax obligations. This is known as tax morale. In many countries, perceived levels of corruption can help in explain this malaise. But, elsewhere, even high levels of corruption can be mitigated by if income from natural resources contributes to a lower tax burden.
At the start of July 2025, global development institutions and policymakers were convened by the United Nations in Seville. There they discussed ways to improve development financing. Improving domestic revenue mobilisation (DRM) in developing countries is a more sustainable way of funding development. The recent cuts in aid budgets from major donor countries has made the quest to deepen DRM efforts in the developing world more important now than ever. Developing countries are ramping up efforts to improve DRMs using a range of tools including the adoption of digital tax filing and payment systems as well as enhanced tax education and awareness campaigns about the benefits and obligations of paying tax. While these efforts have somewhat paid off, there are still significant gaps in revenue mobilisation efforts in Africa. For instance, Africa’s tax-to-GDP ratio of 16 per cent trails that of Latin America and the Caribbean (21.5 per cent), Asia-Pacific (19.3 per cent), and the OECD (34 per cent). To fund its own development, Africa needs to improve its tax revenues.
Property and labour markets in most parts of Africa are characterised by high levels of informality. This effectively narrows the tax base for income tax and property or wealth taxation. It also limits the amount of information available to tax authorities to aid with effective tax enforcement operations. In such circumstances, voluntary tax compliance by the citizenry is vital – hence the importance of tax morale for government revenue.
Corruption, resources, and morale
Earlier research has shown that citizens perception of corruption in public office negatively affects their motivation to comply with tax rules. However, this varies across countries with different levels of natural resource dependence. Compared to resource-poor countries, resource-rich countries on average tax relatively less. This leads to a lower tax burden, which citizens are then more likely to comply with even if there are high levels of perceived corruption. With a higher tax burden, citizens in resource-poor countries are more likely to demand accountability from their governments, thereby strengthening the social contract between the state and the citizenry. This been difficult to achieve in resource-rich countries wherein public spending is largely funded by rents from natural resource exploitation. The relatively lower tax burden in resource-rich countries may cause their citizens to be reluctant to demand accountability from the political leadership and this can affect how corruption perception and tax morale are related in such contexts compared to resource-poor countries.
Classifying countries according to their levels of resource dependency, shows that perceived corruption in public offices is higher among resource-poor countries than among resource-rich countries. (see Fig. 1, Panel B).
Note: Out of the sample of 34 countries considered in this study, 12 are classified as resource rich. These are: Angola, Botswana, Cameroon, Cote d’Ivoire, Gabon, Mozambique, Namibia, Nigeria, Sierra Leone, South Africa, Sudan, and Tanzania.
Individuals’ willingness to pay or comply with tax obligations in Africa is significantly influenced by their perceptions of the level of corruption in public offices. As perceived corruption goes up, willingness to pay tax goes down. This effect however differs across countries with different levels of natural resource dependency. For instance, while corruption leads to decline in tax morale in resource-poor countries, the case is not the same for resource-rich countries. The sensitivity of tax morale to corruption perception is moderated by a country’s level of natural resource dependency.
Dependency on natural resources can weaken the fiscal-social contract between the state and the citizenry. In a strong fiscal-social contract regime, there is a good level of accountability as governments enter reciprocal arrangements with the citizens about the provision of services and representation in exchange for tax payments. Unlike resource-poor countries where the fiscal-social contract seems to be relatively well developed, there is potentially a weak social contract built through taxation in resource-rich countries. This is driven by the fact that resource-rich countries depend largely on rents from natural resource exploitation to finance their budgets and hence tax relatively less.
Perceived corruption in public offices in Africa significantly explains the continent’s tax morale, albeit with differences across resource-rich and poor countries. In particular, the availability and exploitation of natural resources in a country attenuates the negative effect of corruption on tax morale in Africa. This has important implications for African countries and for the developing world, more generally, as the quest to deepen domestic revenue mobilisation has been heightened in recent years.
The design of policies needs to deepen voluntary compliance and must be context specific. That is, while improving the quality of governance would be enough to improve voluntary compliance and thereby tax revenues in resource-poor countries, achieving same in resource-rich countries will require a combination of an improvement in governance quality and reducing (increasing) the dependency on rents from natural resource exploitation (taxation) to fund government budgets.
LSE
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