An extensive doctoral research by Angolan economist Francisco Paulo, recently defended in Portugal, has analyzed the impact of tax reform on non-oil tax revenues in Angola between 2008 and 2021. This study highlights significant milestones in the country’s fiscal policy over the past 13 years.
The research identifies three key phases of Angola’s tax reform. The introduction of the Executive Program for Tax Reform (PERT) in 2011 resulted in a 46% increase in tax revenues. Further advancements include the establishment of the General Tax Administration (AGT) in 2015, boosting non-oil tax revenues by 140.5%, and the implementation of Value Added Tax (VAT) in 2019, which added a further 115.6% increase.
Speaking to Lusa, Francisco Paulo, an assistant researcher at BRU–ISCTE (Research and Development Unit of the University Institute of Lisbon), noted, “The phases of tax reform in Angola significantly contributed to the nominal increase in non-oil tax revenues.” However, he emphasized that while there was nominal growth, the reform negatively impacted the percentage of revenue relative to the non-oil Gross Domestic Product (GDP).
The study discovered a negative correlation between non-oil taxes and non-oil GDP, contrary to expectations. This discrepancy is attributed to “indiscriminate” tax exemptions awarded during the assessed period. Paulo pointed out that many companies within Angola’s non-oil sector benefited from these exemptions despite having the capacity to pay taxes. “The reform unfortunately ignored the critical issue of tax exemptions,” he stated.
Paulo explained that the negative relationship between non-oil GDP and revenues occurred because the reform failed to address the tax incentives or exemptions issued indiscriminately. As a collaborative researcher at the Center for Scientific Studies and Research (CEIC) of the Catholic University of Angola (UCAN), Paulo provided further insights into the implications of these findings.
Additionally, Paulo’s doctoral thesis, distinguished in March in Lisbon, explored the connection between taxation and democracy indices in Africa. Across an analysis of 50 African countries from 1980 to 2021, it was concluded that as tax revenues increase, levels of democracy also rise, “suggesting a positive relationship” between taxation and citizenship.
Paulo suggests that African states with higher tax collection, particularly on populations and businesses within extractive sectors, “tend to exhibit higher levels of democracy.” He asserts, “When citizens pay taxes, they demand greater accountability from their leaders, feeling that their contributions make them active participants in public life, hence desiring effective management of public funds.”
However, Paulo cautioned that the relationship between tax and democracy follows a concave curve; beyond a certain threshold, increasing tax burdens might lower democratic levels.
Francisco Paulo’s thesis, written entirely in English and accessible in the ISCTE repository, received support and funding from CEIC-UCAN, the Portuguese National Institute for Scholarship Management, the Foundation for Science and Technology, and the Norwegian organizations CMI and Scanteam.
DAS // MLL
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