Government revenues from taxation remain low in Africa, undermining state capacity and public goods provision. This trend is particularly striking because many African countries have, in fact, seen improvements in their overall economic performance and have granted greater civil and public liberties, especially since the 1980s and 1990s.
Why do many governments in Africa keep their tax rates low, even when they are in dire need of additional revenues for public services and combating crises like climate change? To what extent can regime type explain variation in taxation? In Strategic Taxation: Fiscal Capacity and Accountability in African States, Lucy Martin answers these important questions through an innovative two-part theory of democracy and state development in the Global South, using a multimethod approach that includes formal models, cross-national data, and fieldwork in Uganda and Ghana.
First, Martin argues that taxation makes citizens more willing and able to hold their leaders accountable by punishing poor performance, including rampant corruption or inadequate service delivery, at the ballot box or via protests. Voters are loss averse and care about how their money is being spent. Governments seek to bargain with voters rather than use coercion, which would make tax collection more expensive.
Second, she examines how accountability pressures from taxed citizens affect state development. Surprisingly, Martin finds that even though African governments need public revenue, citizen pressure prompts them to reduce taxes because they seek to avoid internal challenges to their rule. Leaders forgo revenue to avoid public accountability and maximize their own rents, furthering their private interests.
Martin’s theory therefore explains why democratization decreases public service delivery in low-capacity contexts. Where the state is highly present, governments can meet demands for public services; thus, taxation is higher and bureaucracies professionalize, further reinforcing state capacity.
The six reviewers in this symposium offer numerous avenues for refining Martin’s novel theory and testing its generalizability to further understand the relationship between regime type, taxation, and state development.
Mick Moore and Will Prichard point out that not all voters are taxpayers, and vice versa. Lise Rakner and Fredrick Golooba-Mutebi highlight that in contexts where the state’s presence is low, citizens often make payments to several different entities—not only the government but also ethnic and religious organizations, as well as protection rackets. Moore notes that bargaining can occur through noninstitutional channels and that Afrobarometer’s widely used questions on taxation, which also inform Martin’s study, do not necessarily capture who pays tax (or to whom), because respondents may not want to report unpaid duties.
Building on Martin’s multimethod research, scholars may use focus groups to explore both explicit and implicit forms of bargaining over tax rates, as well as when, why, and how citizens pay taxes. Rakner points out that the reasons why people pay taxes are multifarious and are not necessarily rational. Insights from small-N research can help refine some of the assumptions in game theory and experiments. Adrienne Le Bas suggests that field experiments can include additional options for citizens to hold their leaders accountable, such as by refusing to pay taxes or cast a ballot. Martin herself calls for more research on how taxation can help citizens overcome collective-action problems (p. 197).
Future research can also integrate findings from other parts of the world and diverse political social and economic contexts, building on Martin’s second chapter, which contrasts Africa’s experience with that of early modern Europe. Paul Collier and other reviewers underscore that civil liberties vary across Africa, so that Uganda’s experience may not apply to more democratic places like South Africa, let alone to nations outside Africa. More detailed survey data with questions that account for preference falsification can help test findings cross-nationally.
Strategic Taxation’s novel findings provide excellent grounds for inquiry and debate among policy makers and scholars, as they seek to identify new ways to design tax policy to respond to some of the most pressing challenges of the twenty-first century.
