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Despite rising debt levels, many wealthy Africans pay little or no tax due to weak enforcement and inefficient tax collection. Governments often struggle to identify high-net-worth individuals (HNWIs), leading to lower tax contributions from the rich than from salaried workers.
Key Issues:
🔹 Tax Evasion Among the Wealthy – In Uganda, before 2015, only one of the top 71 government officials paid income tax. In Sierra Leone, only 16% of landlords were registered for tax in 2021.
🔹 Overburdened Tax Authorities – African tax officers handle 10x more taxpayers than their Global North counterparts.
🔹 Ineffective Focus – Authorities often target small businesses, which yield low revenue, rather than focusing on HNWIs and property taxes.
Proposed Solutions:
✅ Better Identification of Wealthy Taxpayers – Defining HNWIs based on transactions, property, and government contracts can improve tracking.
✅ Dedicated Tax Units – Similar to those for large corporations, specialized teams should focus on high-net-worth individuals.
✅ Property & Capital Gains Taxes – Real estate is a major store of wealth; improving valuation and enforcement could increase revenue.
✅ Tax Amnesties & Disclosure Programs – Voluntary reporting schemes in South Africa ($296M) and Nigeria ($192M) have successfully raised funds.
✅ Mandatory Tax Clearance for Politicians – Proven effective in Uganda and Nigeria, this ensures tax compliance among public figures.
These practical reforms could significantly boost tax revenues without introducing new taxes or rate hikes, making African tax systems more efficient and equitable.
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