Taxation and Accountability in Sub-Saharan Africa

The empirical literature has established a connection between taxation and state-building through the contribution of revenue mobilisation to democratisation. However, the underlying mechanisms have been less explored. Using new data, I unpack the relationship between taxation and democracy by directly examining the effect taxation has on accountability. Relying on a panel dataset of 48 African countries from 1980 until 2015 I show that increased taxation causes improvements in accountability scores. Total tax revenue, as opposed to non-tax revenue, correlates positively with accountability scores. This effect is driven by direct taxation, and by trade taxation to a lesser extent. Instrumenting tax revenue, with terms of trade and exchange rate shocks, confirms the results. This suggests a causal interpretation for this relationship.