In Sierra Leone, there was a time when “people were so happy to pay” local taxes, says Joanna Favour Tom-Kargbo, an economic justice manager for the NGO Christian Aid. For instance, her council would make a documentary to show where the money was being spent, such as road or market construction. In that kind of situation, “you don’t need to coerce people to pay. Citizens were willing.”

The situation changed when the government used tax revenue to put on a lavish concert, Tom-Kargbo reports. It was poorly attended, and people considered it a waste of money. Trust in the tax system was broken.

But this kind of trust can be repaired—and it may be more crucial than ever now.

Foreign Aid Cuts Have Increased The Urgency Of Taxation In Africa

After the U.S. rapidly shut down its main foreign aid agency and eliminated over 80% of aid projects, many countries were left in the lurch. This was especially pressing for those that depended on U.S. assistance for basic health services, from vaccination to malaria prevention.

Researchers have estimated that nearly 300,000 people, most of them children, have died from the resulting vacuum of healthcare. One of those is Bukar Mohammed, a 7-year-old boy living with sickle cell disease in Northern Nigeria. After he developed a fever in February, his mother raced with him to their usual clinic—only to be told it had closed the week before due to an abrupt cutoff of funds.

The Trump administration, development officials in other wealthy countries, and aid critics around the world have called for nations receiving foreign assistance to find more of their own funds for development programs. This is partly out of necessity. “If the general overseas development system freezes or decreases, then taxes become even more important than what they currently are,” notes Giovanni Occhiali, a development economist at the International Centre for Tax and Development.

The Africa Centres for Disease Control and Prevention, which itself faces dozens of layoffs amidst a shrinking pool of money for global health, is urging African countries to fund their health sectors through improved and increased taxation. This could include solidarity levies, including taxes on airline tickets, imports, and cell phone services (though taxes on mobile financial transactions have proven very unpopular in countries including Ghana and Uganda). One UN proposal is for all low- and middle-income countries to tax revenue amounting to at least 15% of their GDP.

To some extent, this turn toward domestic taxation is now happening. According to a World Health Organization survey, at least 24 countries are increasing domestic public funding for health. (However, more countries are cutting costs.)

Governments are looking to increased taxation for areas beyond health. The Ethiopian government has proposed an organizational tax that to support disaster response, for instance. But in general, earmarking tax revenue for a specific purpose can risk making a country less responsive to emergencies.

The Grinding Work Of Improving Tax Systems

While governments may be able to temporarily reallocate some resources based on need, it’s no simple task to find more domestic money to plug the gaps. Many people are calling for new taxes on unhealthy products like tobacco, alcohol, and sugar-sweetened beverages, both to increase public revenue and strengthen public health. Such “sin taxes” already exist in South Africa and Botswana. In Zimbabwe, the finance minister recently introduced them in order to dedicate the proceeds to health projects. Yet there will be a lag as these taxes are rolled out. Thus, the World Health Organization is advising countries affected by the foreign assistance cuts to start the sin taxes right away, while rolling out health insurance in the longer term.

Overall, improving tax collection sustainably and equitably takes a long time. It took Togo about 12 years to increase the tax–GDP ratio by 5%, according to Occhiali; for most African countries, growing taxation by half a percentage point a year is ambitious. “Increasing domestic revenue mobilization is always a long-term endeavour,” Occhiali cautions. “Any type of tax reform really needs to be carefully planned and executed over a number of years.”

Indeed, tax changes that seem abrupt or unjust can have tragic consequences. Kenya was shaken by protests last year against proposed taxes on basic goods, following a string of other new taxes. Security forces killed at least 80 demonstrators, by one estimate. The outcry led to a government pledge to avoid new taxes.

In Sierra Leone, “most of the things have been taxed” already, says Tom-Kargbo. Particularly harsh for women feeding their families has been a 2024 tax of 5% on imported rice. This is aimed at bolstering Sierra Leone’s own rice production, but the upshot is that many families have simply been forced to eat less rice. There are also now taxes on phone calls and text messages.

In the context of waning foreign assistance around the world, Occhiali says, “there is a risk that governments facing immediate cuts…might be incentivized to take short-term action that might prove counterproductive in the long term.” He advises focusing on better administering the taxes that already exist, rather than raising new ones.

It may not be as glamorous as a rushed new tax, but strengthening the foundations of tax systems would ultimately be more helpful. According to the International Monetary Fund (IMF), many countries could increase their tax-to-GDP ratios, by up to 9 percentage points, by improving tax design and public institutions.

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What Would Support People To Trust Their Tax Systems?

There are many reasons that tax is under-collected in some African countries. One is insufficient resourcing of tax agencies, which creates a vicious circle of not enough money for the overall public purse. When it comes to sufficiently taxing wealthy Africans, the difficulty tends to not be the legal system, but gaps in data and administrative capacity, says Ronald Waiswa, who worked for the Uganda Revenue Authority before joining the African Tax Administration Forum.

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Corruption is also a problem. And there’s a more amorphous factor as well: low trust in governments to fairly collect tax and use it properly. If residents don’t see the benefits of taxation, they have little reason to support it. They can even see their own governments as parasitic.

As in many African nations, more tax collected in Sierra Leone goes to paying off external debt (primarily to the World Bank and IMF) than is spent on education and health. Sierra Leoneans aren’t necessarily seeing the benefits of the tax they’re increasingly being asked to pay, which often doesn’t even remain in the country. “We’re seeing the impact of poor-quality health services. We are seeing the impact of poverty continue,” Tom-Kargbo notes. “People are saying, ‘Where even are our tax monies going?’”

Sierra Leone has already tried earmarking taxes for free healthcare services, Tom-Kargbo reports. The problems have been implementation, accountability, and transparency—and inadequacy in these areas also lowers trust in the revenue authorities. In Ghana, transparency related to tax reforms makes people more likely to support them. In Somalia, focusing on services makes people especially comfortable with paying taxes.

Systems are currently stacked against poorer consumers. In Uganda, “Our domestic tax system now is really regressive,” comments Africa Kiiza, an economic justice adviser for Christian Aid. High earners are paying the same tax on salt, soap, and sugar as unemployed people, he says. Yet ordinary Ugandans aren’t seeing those consumption taxes necessarily translate into public services like education and health.

In South Africa, the Institute of Economic Justice is calling in the short term not for increased sales taxes, but increased corporate taxes and reduced tax breaks (though some economists believe that South Africa’s VAT taxes can be designed well to not be regressive).

Occhiali is not in favor of further increasing consumption taxes either. Sales tax is “already the main source of government revenue across most of the continent,” he points out. “It sounds a bit perverse to imagine that we should focus on taxes that are already performing relatively well…and ignore the two main sources of revenue that are clearly underperforming”: property tax and income tax.

The Path Toward Fairer Tax, Within And Between Countries

In the interest of equality, the Africa CDC recommends “tiered tax structures to protect low-income populations while ensuring wealthy individuals and corporations contribute more.” Concretely, this could involve not taxing women selling tomatoes informally, for instance, but high earners.

This may seem like a straightforward principle, but it’s actually been the subject of much debate. One reason that so many African workers’ incomes aren’t taxed is that many of these workers are operating outside the formal system of labor contracts and official payments. “Only about 4% of the population on average in the continent pays personal income tax,” according to Occhiali. Yet they are paying a variety of other charges, such as value-added taxes, import taxes and market stall fees.

“There has been, for a very long time, a lot of focus on getting onto the tax registry the vast majority of the informal sector, thinking that they were a gold mine,” Occhiali says, “rather than pursuing the smaller number of well-off individuals within a country who are often evading a significant amount of their tax liability.” As a spectrum, informality can encompass both unregistered vegetable sellers and high-earning lawyers who don’t declare all their income. It would be more productive to focus on the latter, he argues.

The good news is that it shouldn’t be logistically challenging to properly gather property tax and the income tax of high earners. Technology and data collection are improving in ways that can ease this, such as GIS-based assessments of building materials and structure sizes, which can be used to tax higher-value properties more. In Sierra Leone, Occhiali says, the size of the property register doubled with improved data collection.

The bad news is that political will can be hard to amass. “Political pressure plays an important role in this, arguably more than technical reasons,” Occhiali believes. Many politically connected people are reluctant to declare their own taxes or to target high earners, which has contributed to the current situation where wealthy Africans pay less in tax than the average.

Progress can sometimes feel slow, but it’s going in the right direction, according to Occhiali. In Uganda, a decade ago, only one of the 71 top government officials had ever paid individual income tax. And fewer than 30% of top lawyers were paying it. Since then, with a dedicated unit, the Uganda Revenue Authority has collected a significant amount of tax from rich people.

So inequality within a country’s tax system can be addressed. But it intersects with inequality in the global tax system. “The reason why we pay so much in terms of interest,” Kiiza argues, “is because our powers to negotiate fair loans and fairer terms of repayments are constrained at the global level, because of our poor representation or under-representation on the IMF boards and the key decision-making bodies.”

These aspects are expected to be discussed at the Financing for Development conference that begins at the end of June. But countries including the U.S., where the IMF and World Bank are based, are blocking potential reforms. The current system is evidently stacked against Africa. According to the NGOs Christian Aid, Bond, and the Center for Economic and Social Rights, all of Africa holds only 4.7% of voting shares at the IMF and World Bank, slightly more than the U.K. (at 4.03%) and substantially less than the U.S. (at 16.5%).

Unfairness within and between countries is linked, Kiiza stresses. “Our governments are under capture, just like we are also under capture by these governments.”