Economic Governance Report II: A Framework for Assessing and Reporting Tax Expenditures in Africa

The focus of this issue of the Economic Governance Report (EGR II) is on tax expenditures, where governments provide allowances to potential taxpayers that reduce the effective tax base and actual tax revenues collected. The revenue lost through tax expenditures could have been more judiciously allocated among the country’s different development priorities under prudent oversight, ensuring that no one is left behind. This report provides a framework for the effective governance of tax expenditures, including the assessment of the fiscal costs of tax expenditures and reporting. The framework has the potential to inform government consideration of the value-for-money propositions of the expenditures, and to result in expunging unproductive incentives thereby boosting revenue collection. It can also contribute to boosting the continent’s domestic resource mobilization, reducing its vulnerability to debt and volatile external financing, and improve the prospects of meeting its development goals.