Pathways into the Tax Net: Better Ways to Register African Taxpayers

Abstract

Systems for registering taxpayers in sub-Saharan Africa are often poorly designed and managed. There are three characteristic problems: the process of registering new taxpayers is not sufficiently targeted on the people and businesses likely to be liable to pay tax; too many (nominal, unproductive) taxpayers are registered; and taxpayer identification (ID) details in the tax register are inaccurate. These problems interact perversely – each exacerbates the others. They will all to a large degree be solved, almost naturally, as a result of: (a) greater digitisation of tax administration generally, and (b) further interfacing between the digital systems of tax agencies and those of other (public sector) organisations, notably cross-government ID databases. But this takes time. There are significant shorter-term registration problems that need policy attention. In part they have not received it yet because these problems are rare in richer countries, which still exercise a huge influence on the tax reform agenda in Africa and other low-income regions. On the basis of recent experience in a range of African countries, we list some taxpayer registration practices that should be abandoned or used sparingly, and some that should be used more widely, to better target registration on those businesses and individuals who should be paying tax.