ATAF releases seminal analysis on tobacco tax landscape

The African Tax Administration Forum (ATAF) has unveiled the 2023 edition of the African Tax Outlook (ATO), providing an in-depth and influential analysis of the tobacco tax landscape across the continent.

This seminal comprehensive report underscores the pivotal role of tobacco taxes in broadening the tax base and fostering sustainable domestic revenue mobilization.

ATAF Executive Secretary Mr. Logan Wort emphasized the importance of leveraging the insights from the ATO to drive reforms in tax administration and policy. “By doing so, we can broaden the tax base, narrow tax gaps, simplify and improve fairness in tax systems, and enhance overall voluntary compliance,” Wort stated.

Insights from the 2023 ATO indicate a notable recovery in GDP and tax revenue performance in 2022. The average nominal GDP growth improved to 13.13% in 2022 from 11.15% in 2021, surpassing the long-term average.

Revenue collections saw significant growth, rising to 20.95% in 2022 from 16.34% in 2021. The average tax-to-GDP ratio also increased to 15.43% in 2022, with 69% of participating countries recording an increase compared to 2021.

Regionally, the Southern African Development Community (SADC) boasted the highest average tax-to-GDP ratio at 17.49%, followed by the East African Community (EAC) at 14.20%. The Economic Community of West African States (ECOWAS) and the Economic Community of Central African States (ECCAS) recorded ratios of 13.83% and 12.18%, respectively.

The 2023 ATO edition serves as a comprehensive resource, offering evidence-based recommendations for tax administrations and policymakers. ATAF invites tax administrators, policymakers, and other relevant stakeholders to delve into the publication and utilize its insights for informed decision-making and improved revenue collection.

Despite Africa having the lowest smoking prevalence compared to other World Health Organization regions, the report highlights a projected increase in the number of tobacco smokers, from 52 million in 2000 to 84 million in 2025.

The younger population significantly contributes to this rise, underscoring the need for effective tobacco taxation mechanisms.

This landmark analysis provides a foundation for future discussions and strategies, aiming to enhance fiscal stability and public health across the continent.