Abstract

One of the challenges of successful decentralisation is the local administrations’ ability to efficiently mobilise tax revenue. This paper aims to analyse the convergence of municipal administrations’ tax effort in Benin. To address this issue, the paper uses a three-stage stochastic frontier model developed by Kumbhakar et al (2014) on the one hand, and on the other hand, a dispersion analysis was carried out. The data used are panel data from Benin’s seventy-seven (77) municipalities over the period from 2008 to 2020; they are drawn from the statistics of Benin’s National Commission for Local Finances (CONAFIL). The results show that the temporary tax effort (TER) accounts for 67.5%, the permanent tax effort (KHTE) accounts for 25.4%, and the average overall tax effort (OTE) for Benin’s municipalities accounts for 17.3%. Furthermore, the results show that there is little convergence in tax effort amongst municipalities. Finally, it is observed that resource transfers received by municipalities, population density and the municipality’s status have a significant negative impact on the municipalities’ tax effort. These results suggest the need to strengthen both the quantity and quality of staff. Performance criteria should be introduced for access to central Government grants, and experience-sharing between municipalities in terms of tax collection strategies.