Changes in the development finance world – especially the sharp drop in foreign aid and fewer cheap loans for low-income countries – have pushed taxation back into the spotlight.
Africa has entered a new “tax era of development”. As external funding dries up, many African countries are now relying more on their own ability to raise money through taxes. But large parts of African economies are informal, and that’s widely seen as an obstacle to collecting tax revenue.
My recent work, too, shows that countries with high levels of informality tend to collect less tax revenue and face other related challenges.
