Taxes in Burkina Faso: the tax burden below the community standard

• Informal sector little or badly taxed

• Increasingly efficient tax administration

• Can we hope for the abolition of the IUTS

Tax revenue is the main component of the resources mobilized by the State to conduct its budgetary policy. These are revenues from income and profit taxes, social security contributions, taxes levied on goods and services, payroll taxes, property taxes and transfer duties, as well as than other taxes and duties….

If in certain countries, the citizens cry with too much taxes, in others, the taxation is characterized by a weakness of the compulsory levies. In the economic community, an indicator makes it possible to measure and know the level of tax revenue: it is the rate of tax pressure. What is the state of this rate in the country of upright men?

The community standard set is greater than or equal to 20%

The rate of fiscal pressure fluctuated over time but did not reach the sub-regional standard set by the Convergence, Stability, Growth and Solidarity Pact between the Member States of the West African Economic and Monetary Union (UEMOA). According to figures from the Ministry of Economy, Finance and Development (MINEFID), contained in the Economy Dashboard 4^e quarter 2018, published by the National Institute of Statistics and Demography, the tax pressure rate would stand at 16.9% in 2018, against 17.2% in 2017, not in line with the community standard of 20% minimum.

Despite the performance of the tax administration in mobilizing tax revenue, the WAEMU convergence rate remains a miraculous figure. For example, the Directorate General of Taxes, in 2019, had mobilized 869 billion, 855.943 in 2020. In 2021, the mobilization was 1,050,927,670,090 billion FCFA of tax revenue.

In 2022, the performance was around 1,244.45 billion FCFA.

The reasons for the low rate of tax pressure

In view of the figures relating to the mobilization of tax resources showing that the tax administrations are efficient, the low rate of tax pressure would be explained by the fact that the taxable agents and/or activities are relatively low (we speak of the narrowness of the tax base), even though the tax rates are relatively high. Also, the informal sector is little or poorly taxed in economic activity.

We can thus say that the tax burden is badly distributed, some citizens experience the feeling of tax hype and during this time, others escape the tax authorities.

Moreover, this situation could be justified by the fact that the political authorities are working to make the country more attractive, through flexible taxation that is favorable to foreign direct investment. GDP growth could be another explanatory element, the tax pressure rate being the ratio of GDP to all tax resources mobilized.o

RO (Collaborator)

framed

Community situation regarding the rate of tax pressure

SAccording to the 2020 tax pressure forecasts contained in the half-yearly WAEMU multilateral surveillance implementation report, made in 2020, Senegal, with 16.8, is the country whose tax pressure rate is approaching the better than that fixed by the Community (sup or gal) at 20%. It is followed immediately by Burkina Faso, with a rate of 15.9%. The lowest tax pressure rate is that of Guinea-Bissau, around 7.4%. Over this period, the average rate of tax pressure was 12.16%.

If we rely on the forecast data contained in the above-mentioned report, only Senegal could reach the standard in 2023. The report provides for a tax pressure rate of 20% for the country of the Teranga lions. Burkina Faso will not reach it, even in 2025, the forecast at that date being 19.1%.

Filet

Is the abolition of the IUTs possible?

L’application of the single tax on salaries and wages on the bonuses and allowances of workers in the private, parapublic and public sectors had given rise to recriminations when the government ratified it. Bassolma Bazié, then spokesperson for the Coalition of Trade Unions who stood up against the IUTS, declared that the laws passed were not of a humane nature. Recently, this debate is trying to resurface. This tax is one of the most important and secure tax revenues of the State and easy to collect.

From 2019 to 2022, the amount of IUTS collected is more than 535 billion FCFA and is positioned among the most important tax revenues for the benefit of the State budget.

The single wage and salary tax is calculated and withheld by the employer on behalf of the Treasury. However, the employee calculates himself and pays it to the Public Treasury, in the event that the employer is not domiciled in Burkina Faso.

Calculation of the IUTS

For the calculation of the IUTS, the following progressive rates are applied:

Source: General Tax Code

Read also: