Intense debates have taken place on the role of forest taxation in forest management and its potential as a component of public policies. Some reforms, such as the introduction of auctions for allocating concessions in Cameroon, have been controversial and their effects are being assessed in different ways by analysts. Empirical analysis and data suggest that two different aspects have often been confused but should be considered separately: the level of taxes and the structure of the taxation system. The heterogeneity of companies has often been overlooked in economic models. The specific context in which the fiscal reform is planned is critical and a combination of instruments — fiscal and non fiscal, economic and regulatory — should be designed and implemented together to create systemic effects. This is rarely possible through a single reform. The potential of fiscal instruments in fostering SFM should not be over-emphasized, but certain possibilities do exist if taxation is not used alone but as an auxiliary in a coherent set of actions and public policies.

The Cameroonian regulatory framework on forest, wildlife and fisheries requires logging companies to pay an Area Fee (AF), half of which must be redistributed to rural councils (40%) and villages (10%) neighbouring the logging concessions. The AF had the main objectives to provide a consistent contribution to the State budget and to improve rural livelihoods through an equitable and effective redistribution of forest-related benefits. After a decade of implementation, and about 85 million redistributed to about 50 councils, the literature unanimously evaluates the livelihood impacts of the distribution of the AF to communities as weak. Less comprehensive assessments have been carried out on the impacts of distribution of the AF to local governments. This paper discusses the potential of the AF as a tool for local development through local councils, with particular attention to the economic, equity and governance issues. One of the most significant findings is that mayors, although elected and unanimously blamed for embezzlements and mismanagement of the AF, are often only scapegoats in a complex political system that does not allow the rural population to directly sanction the misuse of the AF via the current electoral system.

The paper focuses on mobilizing resources through forestry activity in Liberia and Gabon. It advocates the management of forests in a sustainable manner while obtaining a fair share of rents arising from their exploitation. The paper describes the performance of a generalized area tax through a bidding process for allocating concessions in Liberia and presents the status of forestry taxation in Gabon. Both countries through reform have greatly simplified the fiscal terms for the industry, and further improvements are feasible. A deepening of the reform should consider phasing out export taxation and the consolidation of an area tax and auctions for allocating concessions.

Taxation systems for publicly-owned forests should be founded on a government's constitutional right of radical tenure, simultaneously recognising the rights of forest-dependent stakeholders to share benefits and responsibilities. Complex taxes may be historically explicable but are open to corrupt diversions. A systems approach may be essential for benefit sharing to really reach geographically or institutionally remote beneficiaries. The purpose of each tax should be justified and communicated to tax payers, including through participatory development of tax laws. Transparency in justification and implementation of forest taxes helps to diminish corruption through replacement of administrative discretion by rule-based decision making. Strategists should be more aware of the links between criminality in various sectors.

This article makes a case for reforming the fiscal policies in forested African countries. These fiscal policies have been designed to bring revenues to the states which they have performed satisfactorily but they were less successful in bringing local development. They should be modified to take into account past years experience and new trends, particularly Flegt and certification. They should encourage local investments and high value processing and incite international companies to develop local and regional markets in order to connect them to international markets. They should avoid leaving national producers to the informal sector. They should also help developing sustainable forestry certification in the region as it is an important leverage in the promotion of local development. This article examines the current tax systems and proposes a few solutions

The 2008–2009 economic crisis has hit severely the African timber sector, with a brutal collapse of the foreign demand. Overall, the impact has been of around the loss of one-third of export and production. Companies have been unable to pay the fixed costs represented by the area tax, and this last has been suspended in several countries, notably in Cameroon. The brutality of the crisis has highlighted the absence of automatic correctors embodied in the fiscal system itself. A first, even though insufficient, answer could be to index the area fee to a nation-representative bundle of timber species FOB values. The absence of organisations such as the World Bank in the dialogue between the governments and the private sector is striking, given their past involvement in the forests fiscal reforms in central Africa. The current focus given on REDD, seen by many as an instrument for entering in a post-logging time could explain this passivity. Large FSC-certified companies announced their intention to sell out their concessions in Congo and Gabon. This could prefigure a new picture with various types of small logging enterprises filling the vacuum left by formal industry and some FSC-certified concessionaires replaced by large but less environmentally responsible companies.

Concession allocation by competitive bidding is always fiercely resisted by the local forest industrialists, and sometimes even by members of the forest service. One will be told that “It can't be done”, “It is too complicated”, “It is too expensive” or some such thing. Of course people who benefit from arbitrary allocation will oppose a more objective, transparent and equitable mechanism. It is nonsense to say that it cannot be done, but it will only be done where there are considerable incentives, for example in the form of major grants or loans on favourable terms.The competitive bidding system proposed in this article can considerably increase the revenue of the forest owners, correcting the perennial problem of under-valuation, which not only reduces the revenues of the forest owners but also encourages over-cutting. Bidding can also reduce corruption, although it can of course also be — and often is — undermined by corruption.

In tropical forest management with a stated goal of sustainable production, increasing or refining forest taxation may serve the fiscal objectives of the owner but is unlikely to encourage maintenance of the underlying asset. There is no happy confluence of fiscal, economic and environmental virtues in a single tax instrument. Taxation cannot be an elegant substitute for traditional regulation, itself an imperfect instrument. In any event, policy instruments need to match the management regime socially most appropriate for a given type of forest land. Improved taxation may very well have a role to play in some management regimes but not in those that aim at sustaining the supply of tropical forest services. Different classes of incentives and disincentives are needed there. Early experience with non-tax market mechanisms that facilitate oversight by state while rewarding responsible management by lessees (e.g. performance guarantee bond) ought to be evaluated and obstacles to such instruments' introduction studied. Better understanding of logging's environmental repercussions is much welcome and needs to be further encouraged. Conventional taxation recommendations are in conflict with recent calls for an environmental subsidy via payment for avoided deforestation.