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Employment income tax in Africa: findings from a new dataset

Working paper

Written by Kyle McNabb, Hazel Granger

Working paper

This study introduces the first set of findings from the Centre for Tax Analysis in Developing Countries employment income taxes dataset (TaxDev EITD). The EITD is a new, publicly available dataset that comprises detailed information of the personal income taxes (PIT) and other mandatory taxes and social security contributions owed by employees on wage earnings in Africa, over the period 1995–2020.

We begin by discussing high-level trends in PIT structure, before analysing reform episodes, effective tax rates for individuals and progressivity. We find that reform of employment income taxes (EIT) is infrequent, effective tax rates differ greatly across countries and that the taxes are, on average, progressive, although less so at higher levels of income. We also find that EIT can kick in at a very low level of income; in one in four African countries, an individual would be liable to pay employment income taxes if their wage was less than or equal to the international poverty line of $1.90 a day.