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Tax Bargaining, Fiscal Contract, and Fiscal Capacity in Ghana : A long-term perspective

Aboagye, Prince Young LU and Hillbom, Ellen LU (2020) In African Affairs 119(475). p.177-202
Abstract
Many Sub-Saharan African countries are unable to generate sufficient tax revenues for public purposes. While it is widely accepted that governments’ ability to tax is shaped by politics, the precise mechanisms through which this relationship takes place in practice remain elusive. Based on a historical analysis of four major tax reforms in Ghana from the 1850s to the late 1990s, this article captures the various ways in which taxpayers negotiate with the state in an attempt to limit the extent of taxation, especially in cases where state reciprocity falls short of what people expect. Our evidence suggests that, far from being a recent development, effective taxation in Ghana has long depended on the ability of the state to convince... (More)
Many Sub-Saharan African countries are unable to generate sufficient tax revenues for public purposes. While it is widely accepted that governments’ ability to tax is shaped by politics, the precise mechanisms through which this relationship takes place in practice remain elusive. Based on a historical analysis of four major tax reforms in Ghana from the 1850s to the late 1990s, this article captures the various ways in which taxpayers negotiate with the state in an attempt to limit the extent of taxation, especially in cases where state reciprocity falls short of what people expect. Our evidence suggests that, far from being a recent development, effective taxation in Ghana has long depended on the ability of the state to convince taxpayers that tax revenues will be used for the public benefit. A history of misappropriation of tax revenues, overt corruption, and profligacy diminished taxpayers’ support for governments’ tax efforts. More generally, the article points to the importance of understanding how tax bargaining works in practice and people’s perceptions of their governments over the long term to overcome resistance to tax reforms. (Less)
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author
and
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
Africa, Ghana, taxation, fiscal policy
in
African Affairs
volume
119
issue
475
pages
26 pages
publisher
Oxford University Press
external identifiers
  • scopus:85084491786
ISSN
0001-9909
DOI
10.1093/afraf/adaa004
project
Growing more unequal? Long term trends in inequality in Africa
language
English
LU publication?
yes
id
e9d7c175-8cb8-41bf-99df-a4b9f1842fd3
date added to LUP
2020-03-18 10:46:58
date last changed
2023-12-04 09:52:08
@article{e9d7c175-8cb8-41bf-99df-a4b9f1842fd3,
  abstract     = {{Many Sub-Saharan African countries are unable to generate sufficient tax revenues for public purposes. While it is widely accepted that governments’ ability to tax is shaped by politics, the precise mechanisms through which this relationship takes place in practice remain elusive. Based on a historical analysis of four major tax reforms in Ghana from the 1850s to the late 1990s, this article captures the various ways in which taxpayers negotiate with the state in an attempt to limit the extent of taxation, especially in cases where state reciprocity falls short of what people expect. Our evidence suggests that, far from being a recent development, effective taxation in Ghana has long depended on the ability of the state to convince taxpayers that tax revenues will be used for the public benefit. A history of misappropriation of tax revenues, overt corruption, and profligacy diminished taxpayers’ support for governments’ tax efforts. More generally, the article points to the importance of understanding how tax bargaining works in practice and people’s perceptions of their governments over the long term to overcome resistance to tax reforms.}},
  author       = {{Aboagye, Prince Young and Hillbom, Ellen}},
  issn         = {{0001-9909}},
  keywords     = {{Africa; Ghana; taxation; fiscal policy}},
  language     = {{eng}},
  number       = {{475}},
  pages        = {{177--202}},
  publisher    = {{Oxford University Press}},
  series       = {{African Affairs}},
  title        = {{Tax Bargaining, Fiscal Contract, and Fiscal Capacity in Ghana : A long-term perspective}},
  url          = {{http://dx.doi.org/10.1093/afraf/adaa004}},
  doi          = {{10.1093/afraf/adaa004}},
  volume       = {{119}},
  year         = {{2020}},
}