The centre for tax analysis in developing countries

Overseas Development Institue Institue for Fiscal Studies

This chapter is included in, 'Government fiscal measures during and after an economic crisis: Africa’s response to the impact of COVID-19', a book that considers a number of responses to the impact of COVID-19 on government fiscal measures from an African perspective. The papers all derive from a call for papers for the African Tax Administration Forum's (ATAF) research webinar series organised in collaboration with, the Faculty of Law (University of Pretoria) and, the Wits School of Law.


In the early phase of the COVID-19 pandemic, the role of the tax system was to assist in providing support to businesses and households hit hard by the crisis. With ongoing, but partial, restrictions there is a need to balance recovery stimulus with fiscal consolidation. Tax can play a role in both, but probably as part of a wider package of measures. Stimulus needs to be timely and targeted, which can be challenging, but is likely to require a combination of incentives for private consumption and business investment. Limited fiscal space means added pressure to mobilise domestic revenues sooner, which could have harmful effects on demand and on equity. Nonetheless, the crisis may offer opportunities for building a more sustainable tax system through measures targeted at those who can pay and may also contribute to environmental and development objectives.

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Published on: 6th October 2021

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