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Three-quarters of African Governments are Tightening their Belts

Africa has been through painful bouts of austerity before, with damaging effects on health and education. The IMF examined 82 instances of African governments reducing deficits between 1980 and 2021. About a quarter of the adjustments came from tax rises, and three-quarters from spending cuts. But this time governments plan to have an even split. A greater emphasis on tax rises comes partly at the urging of the IMF, which reckons that in Africa they are less harmful to growth (in rich countries, it thinks the opposite). There are plenty of things that could be taxed more: property in booming cities; oil, gas and mining, which are quite lightly burdened; and the rich, who often pay little. But politicians often find it simpler, and easier on their own pockets, to raise indirect taxes on goods, such as value-added tax (VAT). 
 

THE ECONOMIST

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