Table 5. Illustrations of feasibility considerations on revenue-raising mechanisms in Mozambique.

Variable	New tax on alcoholic drinks	New tax on tourism services	Increased tax on vehicles	Earmarking of a share of revenues from the extractive industries
Political feasibility	Competing interests among ministries. Local producers may claim high sector-specific taxes already exist (–)	Competing interests among ministries (–)	Competing interests among ministries. Revision of law could be complex and lengthy. Autonomy of municipalities might create friction with the central ministry if earmarked (or lead to eventual delays of transferring funds) (–)	Competing interests among ministries (–)
Sustainability	Levy needs to be high enough to deter abusive alcohol consumption or to represent a good source of revenue (+)	A 1–3% levy would probably not provoke shifts in the demand for different types of tourist accommodation (+)	Price elasticity of demand for cars is fairly rigid. No effective and efficient alternative means of (public) transport is in place (+)	Already annually collected and in place for the lifetime of natural resources (+)
Stability	Growing industry (+)	Growing industry and competitive environment (+)	No major fluctuations, at least for light and heavy vehicles in the short and medium term (+)	Revenues depend on fluctuations of international commodity prices, but industries overall are growing (+ –)
Progressivity	With a high level of current smuggling, the burden of a new levy would likely affect the formal sector (+ –)	The burden of the levy would increase with the price of accommodation (+ +)	The levy would be mostly incurred by vehicle owners who can afford to purchase and maintain a vehicle (+)	The tax burden of different income groups would not be affected through this earmarking
Administrative efficiency	Mechanisms to collect taxes are already in place (++)	No information available	Running costs would be high. Building technical capacity will be crucial (– –)	No mechanisms are in place. Running costs would be high. Inter-ministerial management committee is required (– –)
Other possible effects and trade-offs	Potential to reduce alcohol consumption, which increases the health status of the population (+)	Supply side will likely be challenged to provide better services (+)	No anticipated side-effects. Increase in the statutory vehicle tax is unlikely to substantially reduce demand for vehicles (+)	Calls for improved and transparent financial management (+ –)

Note: (– –) very weak; (–)  rather weak; (+ –)  neutral; (+) strong; (+ +) very strong.

Source: Based on country study.⁸