Addressing Inequality in Africa Through Taxation
- Kenya Tax Justice Network - Africa. 2011
- 33p.
The report reveals that taxation, as the main source of finance for most governments is used to assist in the redistribution of wealth or income and to regulate economic activities. The distribution of the tax burden has major implications for levels of equality and inequality. An equitable tax system implies that everyone pays according to his or her own ability. A more equitable tax system is one which ensures that individuals with higher incomes bear a greater tax burden compared to individuals on lower incomes. More progressive taxation can also translate into the generation of more stable, long-term financial resources and a greater ability of policymakers to engage in countercyclical fiscal policies. It can also indirectly affect economic growth by reducing income inequality and also improve the way in which an economy automatically stabilizes itself using the country’s fiscal system. Given the importance of progressive tax systems in achieving social justice and supporting development, efforts should be made to ensure that tax systems are progressive.
