No abstract

This paper examines the existence of a tax paradox on poverty and inequality in the countries of the West African Economic and Monetary Union (WAEMU). To achieve the goal, a fixed effects model on panel data covering the period 1980 to 2019 was used. The results confirm the existence of a tax paradox for indirect taxes. Direct taxes simultaneously reduce poverty and income inequality. However, spending on health and education in WAEMU countries does not reduce poverty and income inequality. Accordingly, this paper suggests on the one hand that governments rethink the design of pro-poor tax policies so that they are net beneficiaries and not net contributors to the tax system. On the other hand, a simultaneous reduction of poverty and income inequality requires governments to target health and education spending to the poorest. JEL Code: H3; D31; E01

No abstract

The aim of this paper is to examine the effect of free trade on the tax efficiency of West African Economic and Monetary Union (WAEMU) countries. Specifically, the objective is, on the one hand, to determine the tax efficiency levels of the various taxes, and, on the other hand, to determine the influence of the common external tariff and trade openness on the tax efficiency of the various taxes in WAEMU countries. Using panel data over the period from 1980 to 2019, a stochastic tax frontier model is estimated to determine tax efficiency scores. A censored Tobit model is then used to assess the effect of free trade on the tax efficiency of countries. The results show respective average tax efficiency scores of 75.494%; 3.355%; 69.312% and 60.336% for total tax, direct tax, indirect tax and tax on foreign trade in WAEMU. In addition, the common external tariff and trade openness positively influence the tax efficiency of countries. However, the interaction between free trade and structural transformation, the quality of tax administration and income inequality reduce the tax efficiency of taxes. Decision-makers need to urgently take into consideration the structural transformation of economies, and the improvement of the efficiency of tax administrations in order to benefit from the application of the AfCFTA.