Tax Revenue Instability in Sub-Saharan Africa: Consequences and Remedies

Helene Ehrhart and Christian Hubert Ebeke ()

No 201025, Working Papers from CERDI

Abstract: This paper focuses on the sources and consequences of the instability of tax revenue in Sub-Saharan African countries. We take advantage of a unique and extraordinarily rich dataset on the composition of tax revenues for a large number of countries. Using panel data for 39 countries observed over the period 1980-2005, our results are threefold. Firstly, the instability of government tax revenue leads to an instability of both the public investment and government consumption, and finally, reduces the level of public investment. Secondly, foreign aid inflows appear to be an effective insurance mechanism against the instability of tax revenue by lowering the sensitivity of public investment with respect to tax revenue shocks. Finally, the reliance on domestic indirect taxation-based systems seems more stabilizing than the dependency on trade tax revenue.

Keywords: Tax Instability; Tax Composition; Public spending; Foreign aid; Sub-Saharan Africa (search for similar items in EconPapers)
Pages: 30
Date: 2010
New Economics Papers: this item is included in nep-acc, nep-afr and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Related works:
Working Paper: Tax Revenue Instability in sub-Saharan Africa: Consequences and Remedies (2013)
Journal Article: Tax Revenue Instability in Sub-Saharan Africa: Consequences and Remedies (2012)
Working Paper: Tax Revenue Instability in Sub-Saharan Africa: Consequences and Remedies (2012)
Working Paper: Tax Revenue Instability in Sub-Saharan Africa: Consequences and Remedies (2011)
Working Paper: Tax Revenue Instability in Sub-Saharan Africa: Consequences and Remedies (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:cdi:wpaper:1192

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