Trust and tax

by reestheskin on 20/12/2022

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Chartbook #181: Finance and the polycrisis (6): Africa’s debt crisis

The context for the following quotes from Adam Tooze is Ghana in particular and Africa in general.

For many African states this […steady growth, feeding an adequate tax base…] is a huge challenge.

As David Pilling writes about Nigeria in the FT:

One measure of the trust that a nation’s people have for the state is the amount of tax they are willing to pay. However grudgingly, under an unwritten social contract people agree to part with a share of their income in the belief that the state will spend it more or less wisely. The public goods provided range from schools, hospitals and roads to police, national defence and the running of the government itself. Everyone benefits from improved services, a better educated and healthier population, safer streets and protected borders. (David Pilling).

Which made me think of the UK.

Further on Tooze quotes Schumpeter:

What Joseph Schumpeter wrote in his essay “The crisis of the tax state” about the European state in the aftermath of the gigantic financial effort of World War I, is no less true for African states faced with the awesome development challenges of the 21st century.

“fiscal measures have created and destroyed industries, industrial forms, and industrial regions even where this was not their intent, and have in this manner contributed directly to the construction (and distortion) of the edifice of the modern economy and through it of the modern spirit …. The spirit of a people, … its social structure, the deeds its policy may prepare … all this and more is written in its fiscal history. He who knows how to listen to its message here discerns the thunder of world history more clearly than anywhere else.

And again, I think of the UK.