Tax Evasion and Capital Flight in Africa

"Expanding the tax base raises government revenue and is essential for sustainable poverty reduction in African countries. With volatile ODA, FDI, loans, and remittances, domestic resource mobilization via taxes remains a vital source of revenue for African governments. Fighting tax evasion is a significant part of this drive to increase government revenue and reduce vulnerability to shocks, including the sudden depletion of official development aid. Capital flight, tax evasion, and tax avoidance are significant developmental problems that require urgent attention. This paper highlights key issues in relation to tax evasion and capital flight via tax havens. It provides an econometric analysis of factors associated with tax evasion using data from three rounds of Afrobarometer Surveys. Policy implications are discussed."