Tropical African Contributions to Federal Finance

Abstract

Few questions are more vexing in the development of an optimum tax structure than that of allocation of tax sources between federal and territorial governments in a federal system. The need for a substantial degree of uniformity in tax structures and burdens in the interest of optimum resource allocation, effective tax administration, and tax compliance conflicts directly with the need for fiscal autonomy on the part of the territorial governments. The result is inevitably a compromise, and in many countries, including Canada, an unstable one, with constant complaints leading to frequent review of the system. Attainment of an optimum solution is difficult at best, and in the older federations, such as Canada, the United States, and Switzerland, change is impeded by tradition, by the doctrine of states' rights, and by the reluctance of one level of government to surrender any of its control over taxation to another level. A review of the solutions to the problem adopted by three federal systems in British tropical Africa, all of relatively recent origin, is of interest both in terms of African problems and for the light which it may throw on the search for better solutions elsewhere.