28/05/25
Should African Countries Focus On Introducing A Wealth Tax In 2025?
Many African countries are currently struggling with their worst debt crisis in over a decade, and are generally struggling to find a way to balance their books that is acceptable to their populations. Deadly unrest in the summer of 2024 led the Kenyan government to withdraw their proposed tax hikes, while the South African budget for 2025 was rejected for a second time in March by a member of the ruling coalition opposed to tax increases. In both cases, much of the opposition was due to the regressive nature of tax changes proposed: a one per cent increase in VAT over two years in South Africa, and a suite of tax hikes in Kenya, including on basic goods such as cooking oil and sanitary pads.
Again, in both cases, civil society and other commentators called instead for progressive tax reforms, with a focus on increasing the tax burden on wealthy citizens. Yet, the hike in the top-marginal income tax rate that South Africa implemented in 2017 did not contribute to increasing revenue – it could actually have had the opposite effect.[1] This leaves African governments faced with a conundrum: broad base tax increases lead to social unrest and loss of popularity, while hiking tax rates on high-income earners is opposed by the elites and might not pay out. So, should governments focus on finding the required support for introducing a wealth tax in 2025?
Answering this question requires a little detour. Since the turn of the century, academics and civil society organisations across high-income countries started paying increasing attention to the tax contribution of wealthier citizens. This is largely due to three simple facts. First, there has been an increased demand for social expenditure connected to the health and pension requirements of an ageing population, recently compounded by the COVID-19 pandemic.[2] Second, both income and wealth inequality have been increasing in many advanced and emerging economies,[3] leading to a shrinking of the middle class and lower intergenerational mobility. Fiscal tools always contributed to redress these imbalances, but their effectiveness weakened through the 21st century as top marginal rates on income and capital decreased.[4] Third – and consequently – effective average tax rates of wealthy individuals in countries such as the United Kingdom (UK)[5] or the United States (US)[6] are often lower than those faced by the majority of these countries’ citizens.
Various developments in early 2025 – the retreat of the US from global dialogues, increases in defence spending across Europe, cuts in official development assistance budgets – led to a resurgence in the call for increased taxation of wealthy citizens in the UK and other countries. However, only France moved in this direction: the lower house passed a motion to introduce a two per cent minimum tax rate on the wealth of individuals whose net worth exceeds €100 million. The tax has been nicknamed ‘the Zucman Tax’ after Gabriel Zucman, a French economist who has long been working on wealth taxation. The bill put in front of the French assembly mirrors his proposal, “ensuring that dollar billionaires pay at least two per cent of their wealth in individual taxes each year”.[7] Such a measure would raise between US$200 and US$250 billion per year globally from around 3,000 individuals, and its expansion to dollar centimillionaires would add another US$100-140 billions. These figures are well above the total official development assistance by OECD members, and an order of magnitude above the aid cuts announced by high-income countries over the first few months of 2025. Overall, it is a great proposal, and one that myself and my colleagues fully support.
Yet, there is one thing that this proposal will do little to address: increasing the redistributive power of the tax systems of low-income countries. This is sorely needed, as they are substantially more unequal than in high-income countries (Figure 1). The reason for this lack of biting power is easily explained: US dollar billionaires and centimillionaires are not evenly distributed across the globe. Africa provides a good example for this: despite a population of approximately 1.5 billion (18.8 per cent of the world's population), the continent hosts only an estimated 21 US$ billionaires (0.7 per cent of the estimated total) and 342 US$ millionaires (0.5 per cent of the estimated total), and almost three-quarters of them are concentrated in just six countries.[8] Nevertheless, as Figure 1 shows, African LICs have an even starker income inequality than the group average, and the picture for wealth distribution looks remarkably similar. Despite this, no single country in the continent has introduced a general wealth tax, although many have taxes on some specific sources of wealth. Given this context, we can go back to the initial question of this piece: should their introduction be a priority?
Figure 1: Ratio of income and wealth accruing to top 10% and bottom 50% of the population in 2022
Source: Author’s elaboration on data from the World Inequality Database. Data for Africa covers 36 low- and lower-middle-income countries. Data for LICs covers 28 low- and lower-middle-income countries outside of the African continent, and data for HICs covers 50 countries.
Maybe surprisingly, my answer to this question is no. This is not because of any in-principle opposition, but rather because when everything is considered, countries across the continent would likely be better off by first ensuring that their wealthiest citizens comply with the tax measures already in place. As Figure 2 shows, property tax and personal income tax are by far the worst performing taxes across the continent, and these are exactly the tax headings bearing on the wealthiest citizens. Improving the performance of property taxes would be especially relevant, as research in countries as diverse as Ethiopia and Rwanda demonstrates that real estate investment represents the main storage of wealth in the continent.[9] These properties also contribute to increasing the income of wealthy Africans, who sell them for a profit or rent them out for stable income streams, and while we lack granular data on the performance of capital gains and rental income taxes across the continent, there are good reasons to believe they are also underperforming.
Figure 2: CIT, PIT, property tax, and VAT – ratio between tax collection in HICs and LICs as share of GDP, 2009-2018 average
Source: Authors’ elaboration on data from UNU-WIDER/ICTD Government Revenue Dataset.
Various pieces of work carried out by my colleagues and me at the International Centre for Tax and Development helps to put these figures in context across different countries. While taxes on the salaries of African citizens in formal employment contribute most of the personal income tax across the continent, only 17 of the country’s 60 most successful lawyers, and one of the top 71 government officials paid any personal income tax in Uganda prior to 2015.[10] Similarly, during a registration drive in 2021, only 16 per cent of all landlords identified in Freetown, the capital of Sierra Leone, had registered for taxes.[11] In practice, this implies that – as shown in high-income countries – wealthy Africans are also likely to face lower effective tax rates than the average citizens in their countries.
While these figures are demoralising, African revenue authorities can take some immediate steps to address this unfairness. Effective strategies to increase the tax contribution of wealthy citizens revolve around three strategies: improving their identification; simplifying their tax compliance process; and ensuring effective enforcement of their obligations. These suggestions might seem mundane, but they have led to quick and substantial revenue gains of as much as US$5.5 million in Uganda[12] and US$900,000 in a single Nigerian state[13] in one year, as well as tripling revenue from property tax in Sierra Leone’s capital. However, to achieve these results, African revenue authorities – and the governments overseeing them – need to change some of the ways in which they operate.
To start with, African governments need to ensure that their revenue authorities are better resourced. A typical tax officer in the continent usually manages as many as ten times the number of taxpayers as their counterpart in a high-income country.[14] Additionally, their effort is too often directed towards the registration of small informal businesses, which are often seen as an untapped gold mine, while in practice they contribute very little revenue in countries as diverse as South Africa[15] and Sierra Leone.[16] Rather than chasing this red herring, revenue authorities’ efforts should be dedicated to identifying high-net-worth individuals.
The first step in this process is to develop a definition more appropriate to their local context than that used internationally (a net worth of US$1 million), which is usually hard to operationalise due to a lack of information. African revenue authorities should instead rely on the data already in their possession. This can allow them to define a set of core criteria, eg the value of bank or land transactions, and non-core criteria, eg owning high-value cars, to define the pool of those qualifying for particular attention from the tax authority (as done in Uganda). In federal countries, or states with high intra-country variation in economic conditions, multiple definitions can co-exist (as in Nigeria).
Once this definition has been developed, tax affairs of high-net-worth individuals should then be assigned to a dedicated unit, as already happens for large corporate taxpayers. This unit will need the substantial backing of the revenue authority senior management, which in turn will require the backing of the cabinet to pursue often well-connected individuals: the absence of a real political will to enforce legislation is often the hardest obstacle to overcome. However, a cooperative approach should be pursued first. Voluntary disclosure programs associated with amnesties on penalties and interests are useful to obtain information about the assets of wealthy citizens. They can also contribute substantial revenue, as much as US$296 million in South Africa, and US$129 million in Nigeria.[17] Forcing candidates running for public office to obtain tax clearance certificates can also help gathering both revenue and information, as demonstrated by both Uganda and Nigeria.
Actioning these points requires an assessment of the underlying administrative, legal, and political obstacles that have led to the current underperformance of many existing tax instruments across African countries. By being bold about the basic functioning of their tax systems, African countries will ensure that wealthy individuals make a fair contribution to domestic revenue mobilisation, while strengthening their position for future discussion around wealth taxation.
[1] Axelson, C., Pirttilä, J., Hohmann, A., Raabe, R., and Riedel, N. (2024), “Taxing top incomes in the emerging world”, SA-TIED Working Paper 232
[2] OECD (2023), “The rise and fall of public social spending with the COVID-19 pandemic”, OECD Social Expenditure (SOCX) Update 2023
[3] Chancel, L. and Piketty, T. (2021), “Global Income Inequality, 1820–2020: the Persistence and Mutation of Extreme Inequality”, Journal of the European Economic Association 19(6):3025-3062
[4] Förster, M., Llena-Nozel, A., Nafilyan, V. (2014), “Trends in Top Incomes and their Taxation in OECD Countries”, OECD Social, Employment and Migration Working Papers No. 159
[5] Advani, A., Summers, A. (2020), “How much tax do the rich really pay? New evidence from tax microdata in the UK”, CAGE Policy Briefing no. 27
[6] Saez, E. and Zucman, G. (2019), “The Triumph of Injustice: How the Rich Dodge Taxes and How to Make them Pay”, New York: W. W. Norton.
[7] Zucman, G. (2024), “A blueprint for a coordinated minimum effective taxation standard for ultra-high-net-worth individuals”, Commissioned by the Brazilian G20 Presidency
[8] Occhiali, G., Mascagni, G., Prichard, W. and Hearson, M. (2025) “Taxing the Wealthy in Lower-Income Countries: Why It’s Important, and How to Do It”, ICTD Policy Brief 14, Brighton: Institute of Development Studies
[9] Goodfellow, T. (2017), “Taxing property in a neo-developmental state: The politics of urban land value capture in Rwanda and Ethiopia”, African Affairs116(465):549-572
[10] Kangave, J., Nakato, S., Waiswa, R. and Zzimbe, P.L. (2016), “Boosting Revenue Collection through Taxing High Net Worth Individuals: The Case of Uganda”, ICTD Working Paper 45, Brighton: Institute of Development Studies
[11] Kangave, J.; Occhiali, G. and Kamara, I. (2023) “How Might the National Revenue Authority of Sierra Leone Enhance Revenue Collection by Taxing High Net Worth Individuals?”, ICTD Working Paper 156, Brighton: Institute of Development Studies
[12] Kangave, J., Nakato, S., Waiswa, R., Nalukwago, M. and Zzimbe, P.L. (2018), “What Can We Learn from the Uganda Revenue Authority’s Approach to Taxing High Net Worth Individuals?”, ICTD Working Paper 72, Brighton: Institute of Development Studies
[13] Occhiali, G., Kangave, J. and Khan, H.A. (2025), “Taxing high-net-worth individuals in Nigeria: Challenges and opportunities for policy-makers from a preliminary investigation”, Development Policy Review 43(2)
[14] Okunogbe, O. and Tourek, G. (2024), “How Can Lower-Income Countries Collect More Taxes? The Role of Technology, Tax Agents, and Politics”, Journal of Economic Perspectives 38(1):81-106
[15] Lediga, C., Riedel, N. and Strohmaier, K. (2025), “What you do (not) get when expanding the net - Evidence from forced taxpayer registrations in South Africa”, Journal of Development Economics 172
[16] Gallien, M., Occhiali, G. van den Boogaard, V. (2023) “Catch Them If You Can: the Politics and Practice of a Taxpayer Registration Exercise”, ICTD Working Paper 160, Brighton: Institute of Development Studies
[17] ATAF (2024), “ATAF Guide on Implementation of the Voluntary Disclosure Programme”, African Tax Administration Forum
Giovanni Occhiali
Giovanni Occhiali is a Research Fellow at the Institute of Development Studies and the International Centre for Tax and Development, where he leads work on environmental and climate taxes and high net worth individuals’ taxation. He holds a PhD in Economics from the University of Birmingham, and prior to joining IDS he was an ODI Fellow posted at the National Revenue Authority of Sierra Leone.
