Tax Capacity in the West African Economic and Monetary Union
October 15, 2024
As part of its partnership with the WAEMU Commission, FERDI conducted an analysis of environmental taxation in WAEMU Member States. A report was submitted to the WAEMU (in French), highlighting the weakness of Member States’ environmental performance, particularly in terms of climate change adaptation. It also emphasises the potential of green tax reforms to both mobilise domestic resources and support the ecological transition.
The report recommends 1/ A review of existing regulations on the taxation of petroleum products, vehicles and plastics; 2/ Technical assistance for Member States in designing taxes on carbon emissions from land-based and maritime activities.
In support of WAEMU’s regional objectives for tax revenue mobilisation, FERDI conducted — in partnership with the WAEMU Commission — a study on tax disparities between Member States (not published), highlighting the challenges of revenue collection and compliance with evolving fiscal regulations.
Key Findings:
Tax pressure remains insufficient to provide adequate funding for public services and development. In 2021, the average tax-to-GDP ratio in WAEMU was 13.11% (13.8% in 2022), significantly below the 20% threshold recommended by the United Nations.
Tax gaps — the difference between potential tax revenue and actual revenue collected — were estimated at an average of 6.24% of GDP over 2018–2022, with significant disparities across countries.
Nearly half of these gaps result from tax expenditures (exemptions, reduced rates, etc.), while the remainder stem from compliance gaps due to informality, tax evasion, or administrative inefficiencies.
The study’s conclusions pave the way for tax reforms that reconcile the objectives of revenue mobilisation with the need to support economic growth in the region.
