The Marginal Cost of Public Funds and Tax Reform in Africa

@inproceedings{AURIOL2009TheMC,
  title={The Marginal Cost of Public Funds and Tax Reform in Africa},
  author={EMMANUELLE AURIOL and Michael Walters},
  year={2009}
}
In this paper we propose estimates of the marginal cost of public funds (MCF) in 38 African countries. We develop a simple general equilibrium model that can handle taxes on five major tax classes, and can be calibrated with little more than national accounts data. Our base case estimate of the average MCF from marginal increases in all five tax instruments is 1.2. Focusing on the lowest cost tax instruments in each country, commonly the VAT but not always, the average MCF is 1.1. A key feature… CONTINUE READING