Electricity Provision and Tax Mobilization in Africa

This paper provides evidence on how the provision of social infrastructure, such as reliable electricity, can be leveraged to increase taxation in developing countries, particularly in Sub-Saharan Africa. First, using comprehensive data from the la...

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Main Authors:	Blimpo, Moussa, Mensah, Justice Tei, Opalo, K. Ochieng’, Shi, Ruifan
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2018
Subjects:	ELECTRICITY TAXATION TAX REVENUES UTILITIES TAX COMPLIANCE ELECTRICITY ACCESS NATIONAL IDENTITY ENTERPRISE SURVEY
Online Access:	http://documents.worldbank.org/curated/en/456951523908618247/Electricity-provision-and-tax-mobilization-in-Africa http://hdl.handle.net/10986/29710

id	okr-10986-29710
recordtype	oai_dc
spelling	okr-10986-297102021-06-08T14:42:45Z Electricity Provision and Tax Mobilization in Africa Blimpo, Moussa Mensah, Justice Tei Opalo, K. Ochieng’ Shi, Ruifan ELECTRICITY TAXATION TAX REVENUES UTILITIES TAX COMPLIANCE ELECTRICITY ACCESS NATIONAL IDENTITY ENTERPRISE SURVEY This paper provides evidence on how the provision of social infrastructure, such as reliable electricity, can be leveraged to increase taxation in developing countries, particularly in Sub-Saharan Africa. First, using comprehensive data from the latest round of the Afrobarometer survey, the paper uses the instrumental variable approach to estimate the effect of access to and reliability of electricity on the tax compliance attitudes of citizens in 36 countries in Sub-Saharan Africa. The evidence shows a significant positive effect of electrification on tax compliance attitudes, with potentially strong externalities. The analysis also finds that the reliability of supply is crucial in explaining the impact of electricity access on attitudes toward taxes. Second, the paper provides suggestive evidence on national identity as one channel driving this impact. Access to social amenities such as electricity induces a sense of national identity among citizens, thereby incentivizing them to contribute, through taxes, toward the functioning of the state. Third, using data from the most recent World Bank Enterprise Surveys and under conservative assumptions, the paper estimates that countries in the region could in total generate additional tax revenues of more than $9.5 billion (4.3 percent of total tax revenue) per year solely by resolving issues related to electricity shortages. Put together, the paper concludes that the financial returns associated with public investments toward improving access to and reliability of electricity are substantial and could be harnessed to augment the financing gap in the sector. 2018-04-20T14:12:41Z 2018-04-20T14:12:41Z 2018-04 Working Paper http://documents.worldbank.org/curated/en/456951523908618247/Electricity-provision-and-tax-mobilization-in-Africa http://hdl.handle.net/10986/29710 English Policy Research Working Paper;No. 8408 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Africa Sub-Saharan Africa
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	ELECTRICITY TAXATION TAX REVENUES UTILITIES TAX COMPLIANCE ELECTRICITY ACCESS NATIONAL IDENTITY ENTERPRISE SURVEY
spellingShingle	ELECTRICITY TAXATION TAX REVENUES UTILITIES TAX COMPLIANCE ELECTRICITY ACCESS NATIONAL IDENTITY ENTERPRISE SURVEY Blimpo, Moussa Mensah, Justice Tei Opalo, K. Ochieng’ Shi, Ruifan Electricity Provision and Tax Mobilization in Africa
geographic_facet	Africa Sub-Saharan Africa
relation	Policy Research Working Paper;No. 8408
description	This paper provides evidence on how the provision of social infrastructure, such as reliable electricity, can be leveraged to increase taxation in developing countries, particularly in Sub-Saharan Africa. First, using comprehensive data from the latest round of the Afrobarometer survey, the paper uses the instrumental variable approach to estimate the effect of access to and reliability of electricity on the tax compliance attitudes of citizens in 36 countries in Sub-Saharan Africa. The evidence shows a significant positive effect of electrification on tax compliance attitudes, with potentially strong externalities. The analysis also finds that the reliability of supply is crucial in explaining the impact of electricity access on attitudes toward taxes. Second, the paper provides suggestive evidence on national identity as one channel driving this impact. Access to social amenities such as electricity induces a sense of national identity among citizens, thereby incentivizing them to contribute, through taxes, toward the functioning of the state. Third, using data from the most recent World Bank Enterprise Surveys and under conservative assumptions, the paper estimates that countries in the region could in total generate additional tax revenues of more than $9.5 billion (4.3 percent of total tax revenue) per year solely by resolving issues related to electricity shortages. Put together, the paper concludes that the financial returns associated with public investments toward improving access to and reliability of electricity are substantial and could be harnessed to augment the financing gap in the sector.
format	Working Paper
author	Blimpo, Moussa Mensah, Justice Tei Opalo, K. Ochieng’ Shi, Ruifan
author_facet	Blimpo, Moussa Mensah, Justice Tei Opalo, K. Ochieng’ Shi, Ruifan
author_sort	Blimpo, Moussa
title	Electricity Provision and Tax Mobilization in Africa
title_short	Electricity Provision and Tax Mobilization in Africa
title_full	Electricity Provision and Tax Mobilization in Africa
title_fullStr	Electricity Provision and Tax Mobilization in Africa
title_full_unstemmed	Electricity Provision and Tax Mobilization in Africa
title_sort	electricity provision and tax mobilization in africa
publisher	World Bank, Washington, DC
publishDate	2018
url	http://documents.worldbank.org/curated/en/456951523908618247/Electricity-provision-and-tax-mobilization-in-Africa http://hdl.handle.net/10986/29710
_version_	1764470036044447744

Electricity Provision and Tax Mobilization in Africa

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