African Public Finance the Heritage Essay

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There is some circularity to this argument; government needs to "scale up infrastructure investment to reduce production and trade costs" (Mubiru, a. 2010. PP. 5), yet cannot do so without consistent revenue streams.

The property tax represents a broad-based scheme "which offers a significant, and largely unexploited opportunity for taxation in Africa" (Mubiru, a. 2010. PP. 5). Property taxes "can grow with urban development and the corresponding need for urban infrastructure…and are progressive, scalable, and administratively feasible" (Mubiru, a. 2010. PP. 5). In Botswana "local authorities levy rates on property owners" (Deloitte.com. Botswana. 2012. PP. 1-2) with sale rates not exceeding five percent (Deloitte.com. Botswana. 2012. PP. 1-2). The "rates" provide a solid funding base which allows for continued upgrade and development of infrastructure. Zimbabwe by contrast has no property tax rate which has left their infrastructure open to decay and stagnation. The rule for policy onlookers should be a low "rate" scheme which will grow as investment and infrastructure bloom. This tax program however, must be in the larger context of an effective overall tax policy.

Tax Policy

The stability and prosperity of Botswana is reflected in a tax regime which is built to raise revenue to fund necessary government service but encourages economic freedom and dynamic free markets.

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Zimbabwe presents a complex and confiscatory system which discourages entrepreneurial activity and wealth accumulation. Tax structures must provide transparency, low rates, as broad a base as possible, and a configuration which allows expansion of individual investment and savings. The goal of lower income African nations should be to build a flat rate system which strives to reduce the "total tax burden as a percentage of total domestic income" (Heritage.org. About. 2012. PP. 1-2) to a level which balances private investment with government spending needs on infrastructure.

Looking at Botswana and Zimbabwe, the former provides top income and corporate tax rates of 25% and a low value added tax of 12%; equally important the resident and non-resident individual and corporate entity are treated as equals under the tax code (Deloitte.com. Botswana. 2012. PP. 1-2). Zimbabwe has since the collapse of their state currency impacted meaningful change on their tax rate regime however, the rates are still significantly higher than Botswana, with the top income tax rate of 35%, corporate rate of 25%, and VAT of 15% (Deloitte.com. Zimbabwe. 2012. PP. 1-2). Additionally there is opaqueness in the tax code on foreign investment and non-resident incomes. Interesting to note also that the hyperinflation of the.....

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