AN INVESTIGATION INTO THE CHALLENGES  OF  IMPLEMENTING TAX REFORMS FOR SUSTAINABLE REVENUE GENERATION IN CAMEROON

CHAPTER ONE

INTRODUCTION

Background of the study

Taxation plays a crucial role in government financing, allowing for the supply of public goods and services that are necessary for the well-being of society and the development of the economy. Nevertheless, the efficiency and long-term viability of tax systems have been a consistent global issue. Given the ever-changing economic, social, and environmental issues, governments often confront the need to modify their tax systems in order to generate sustainable income while also fostering economic development, fairness, and fiscal stability(Fonteh & Ngeh, 2020). The need for tax reform stems from a multitude of variables, such as shifts in demographic trends, developments in technology, globalisation, and changing patterns of economic activity. These changing circumstances provide considerable difficulties for conventional tax systems, requiring flexible actions to increase income production while also addressing new fiscal and social priorities (Ngwa & Akoachere, 2018). Therefore, it is essential for policymakers, tax administrators, and other stakeholders engaged in fiscal policy formulation and implementation to comprehend the difficulties linked to the execution of tax changes aimed at achieving sustainable revenue collection(Uche and Obi, 2016). A key concern in debates on tax reform is the pursuit of long-term financial stability. Sustainable revenue production refers to the capacity of tax systems to continually produce sufficient funds to cover government expenses in the long run, without excessively burdening taxpayers or hindering economic progress. To achieve revenue sustainability, it is necessary to carefully manage the expansion of the tax base, improve compliance, and optimize tax rates in order to maximize revenue generation without hindering economic activity or worsening inequality(Bassey, 2016). Throughout history, tax changes have been undertaken for a variety of purposes, including the mobilisation of revenue, fiscal consolidation, the promotion of economic efficiency, justice, and social welfare. Nevertheless, the effective execution of tax changes encounters several obstacles, including from the intricacies of tax policy formulation, limitations in administrative capabilities, political economic factors, and opposition from entrenched interests (Ogar, Ogar & Anyim, 2016). Furthermore, the success of tax reform measures typically depends on the overall socio-economic conditions, institutional capabilities, and governance dynamics in which they are carried out.Nevertheless, the tax system in Cameroon has many obstacles that hinder its ability to generate consistent income and foster socio-economic progress. The advent of novel technology and digital business models has caused significant disruptions to conventional tax systems, presenting policymakers with further difficulties in adjusting tax regulations and enforcement methods to accommodate the digital economy(Makoge, 2017; Simo, 2020). The absence of borders in digital transactions and the intangible character of digital products and services make it difficult to assure fair and effective taxes. This raises concerns about whether current tax structures are sufficient to capture the value generated in the digital realm. Therefore, the researcher sought to investigate the challenges of implementing tax reforms for sustainable revenue generation in Cameroon.

1.2 Statement of the problem

Although taxes is widely acknowledged as a crucial element for generating sustainable income to support socio-economic development, Cameroon continues to struggle with ongoing obstacles in efficiently implementing tax changes to improve revenue collection. The existing tax system's inefficiencies and shortcomings impede the country's capacity to generate enough income to fulfil its development goals and tackle urgent socioeconomic demands. Cameroon's tax system is marked by intricate legislation, inadequate enforcement capabilities, extensive informal economic activities, and tax evasion practices. These factors result in revenue leakages and hinder the government's efforts to generate revenue (Nkume, 2019; Fosso, 2018). Furthermore, the absence of coordination between tax policies and economic growth objectives worsens the issue, resulting in less than ideal revenue results and impeding the ability to manage finances sustainably (Agbor, 2017). In addition, Cameroon has additional obstacles due to the changing global economic environment and increasing international tax standards. To address these issues, it is necessary to embrace contemporary tax administration techniques and incorporate worldwide best practices into its domestic tax policy (Kekem, 2020; Tankou, 2016). Nevertheless, the process of adopting and executing these changes is hindered by deficiencies in the institutions, limitations in resources, and opposition from established stakeholders (Fossouo, 2021; Njinkeu, 2015). Hence, the study  investigate the challenges  of  implementing tax reforms for sustainable revenue generation in Cameroon. 

1.3 Objective of the study

The broad objective of the study is to investigate the challenges  of  implementing tax reforms for sustainable revenue generation in Cameroon.  The specific objectives is as follows:

Analyze factors that influence the implementation of tax reforms for sustainable revenue generation in Cameroon.

Evaluate the impact of tax reform on revenue generation in Cameroon 

Investigate the challenges  of  implementing tax reforms for sustainable revenue generation in Cameroon.

Propose strategies aimed at  enhancing sustainable tax generation in Cameroon.

1.4 Research questions

The following questions have been prepared for the following

What are the factors that influence the implementation of tax reforms for sustainable revenue generation in Cameroon?

What is the impact of tax reform on revenue generation in Cameroon? 

What are the challenges of implementing tax reforms for sustainable revenue generation in Cameroon?

What are the strategies aimed at  enhancing sustainable tax generation in Cameroon?

1. 5   Significance of the Study

The findings of this study will provide valuable insights and evidence-based recommendations to policymakers, tax authorities, and government officials in Cameroon. The study will aim to suggest ways of improving tax administration systems, enhancing compliance, and combating tax evasion and avoidance, thereby strengthening the capacity of governments to mobilize revenue efficiently inform the development and implementation of targeted policy interventions aimed at improving tax administration, enhancing compliance, and fostering economic development.

Academic Contribution: The study will contribute to the academic literature on taxation, it will also stimulate further research and scholarly inquiry into related topics, thereby enriching academic discourse and advancing knowledge in the field of economics and public policy.

1.6   Scope  of the Study

The study focuses on the challenges of Implementing tax reforms for sustainable revenue generation in Cameroon. Empirically, the study will analyze factors that influence the implementation of tax reforms for sustainable revenue generation in Cameroon, evaluate the impact of tax reform on revenue generation in Cameroon, investigate the challenges  of  implementing tax reforms for sustainable revenue generation in Cameroon and propose strategies aimed at  enhancing sustainable tax generation in Cameroon.

1.7    Limitations of the Study

Like in every human endeavour, the researchers encountered slight constraints while carrying out the study. Insufficient funds tend to impede the efficiency of the researcher in sourcing for the relevant materials, literature, or information and in the process of data collection (internet, questionnaire, and interview), which is why the researcher resorted to a moderate choice of sample size. More so, the researcher will simultaneously engage in this study with other academic work. As a result, the amount of time spent on research will be reduced.

1.8Definitions of Terms

Tax Reforms: Tax reforms refer to deliberate changes or modifications made to the structure, policies, and administration of a country's tax system with the aim of improving its efficiency, fairness, and revenue generation capacity. Tax reforms may involve adjustments to tax rates, exemptions, deductions, compliance procedures, enforcement mechanisms, and the overall regulatory framework governing taxation.

Sustainable Revenue Generation: Sustainable revenue generation entails the consistent and sufficient generation of public revenue over time to meet government expenditures and investment needs without jeopardizing the long-term fiscal health or economic stability of a country. Sustainable revenue generation involves maximizing revenue streams while ensuring that tax policies and collection practices do not excessively burden taxpayers or impede economic growth.

Taxation: Taxation is the process by which governments impose financial charges or levies on individuals, businesses, and other entities within their jurisdiction to raise revenue for public purposes. Taxes are typically compulsory contributions imposed by the government, collected by tax authorities, and used to finance public goods and services, social welfare programs, infrastructure development, and other government expenditures.