ABSTRACT
Over the last few decades, a number of distinct arguments have flowered in the public finance literature to make a cogent case for the need for vigorous state intervention and taxation in less developed economies.1 Some of those arguments, to a certain degree inspired by concomitant developments in moral philosophy, include prevalent market failures, vulnerability due to extreme deprivation and inequality (for a classic discussion, see, for example, Burgess and Stern 1993). Still, even if public finance theory seems increasingly to suggest some role for taxation to play in promoting development, on the practical side developing countries face extremely complex challenges. Notwithstanding the increasing attention that taxation merits in their
economic policy agenda, an overwhelming majority of developing countries generally tend to be affected by weak tax administration capabilities. In this chapter, we consider the institutional design of tax administration in Mozambique, a country often cited as a typical case of successful economic reform in Africa. The chapter reflects some real preoccupations concerning particular problems in fiscal administration in Mozambique. It is recognized throughout that a robust, efficient and corruption-free tax administration has the potential to make a crucial contribution to resource mobilization and consequently to the lives of the Mozambican population. It is also recognized that increasing self-reliance, and thus reducing dependency on outside sources of financing, is critical to the development process. At the time of writing, the fiscal administration in Mozambique is under-
going significant and far-reaching reform. The responsibility for the administration of internal taxes belongs to the Direcção Geral da Administração Tributária dos Impostos (DGI), while the Direcção Geral das Alfa¸ndegas (DGA) manages the collection and control of customs taxes at the national border.2
Both directorates form part of the Ministry of Finance, with each respective General Director reporting directly to the Minister. These two agencies are going through distinct stages of their respective reform processes but are eventually expected to merge into a single central revenue authority from early 2007, with dual responsibility for the administration of internal and customs taxes.
