Tag: Tax

Fiscal space for development concept
Building resilience

Are we trading away fiscal space for development?

By Devika Dutt, Lecturer in Development Economics at King’s College, London and Kevin P. Gallagher, Director of the Boston University Global Development Policy Center, and Professor of Global Development Policy at Boston University

Developing nations need to mobilise an additional USD 1 trillion per year to meet their shared 2023 development and climate goals, but the need to invest comes precisely at a time when developing countries lack the fiscal space to do so.

What has been driving debt distress and how can governments and international institutions adapt to help?

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Development Matters
Reviving multilateralism

Stopping the leaks: a fresh look at tax breaks for foreign aid

By Rachel Morris, Policy Analyst – Financing for Sustainable Development (Development Co-operation Directorate), and Joseph Stead, Senior Policy Analyst – Tax and Development (Centre for Tax Policy and Administration), OECD

Faced with the worst economic downturn since World War II, developing country governments are scrambling to maximise resources to stay afloat. During the COVID-19 pandemic, developing countries took a massive hit to their government revenues: USD 689 billion fewer revenues were generated in 2019 compared to 2020.1  The poorest countries are now faced with an increasing gap to finance the Sustainable Development Goals (SDGs) due to higher financing needs and fewer resources to spend on recovery. In addition to declining government revenues, increasing pressures on available foreign aid mean that resources to avoid debt and climate crises are stretched2. With government revenues in developing countries expected to remain almost 20% below pre-pandemic levels, every penny counts, especially those coming from tax revenues. But tax exemptions can stand in the way of maximising tax revenues.

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Development Matters
ODA

Why we need greater transparency on how aid is taxed

By Jorge Moreira da Silva, Director of the OECD Development Co-operation Directorate and Pascal Saint-Amans, Director, OECD Centre for Tax Policy and Administration

Should projects financed by foreign aid be subject to tax? Historically, donors have claimed tax exemptions on most projects funded by Official Development Assistance (ODA), reasonably arguing this would maximise the impact of ODA, not least by sparing these projects from the perceived hazards of high taxes, lack of transparency and corrupt or inefficient government institutions. However, these assumptions have been increasingly challenged in recent years. Many developing countries have made strides in improving their tax systems, simplifying regimes, professionalising administration and reducing the burden of compliance.

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Development Matters
Africa, Covid-19, New social contract

Well-designed tax policy reforms are key to successful post-Covid fiscal consolidation in Africa

By Daniel Prinz, Research Economist and Country Programme Manager at the Institute for Fiscal Studies (IFS) Centre for Tax Analysis in Developing Countries (TaxDev)

Given the massive impact of the COVID-19 pandemic on public finances globally, it is little surprise that the IMF’s October 2021 forecasts of debt and debt servicing costs in sub-Saharan Africa are substantially higher than was projected in October 2019 (Figure 1). Many countries in sub-Saharan Africa may need to impose fiscal consolidation measures to enhance the sustainability of their public finances even before their economies have fully recovered from the pandemic. The need for higher public revenues is an opportunity for countries to make their tax systems more efficient and equitable, particularly through well-designed green taxes, property taxes and rationalised tax expenditures. Getting these reforms right will be essential to ensure they do not slow the recovery and that they are socially and politically acceptable.

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Development Matters
New social contract

Digitalização como estratégia anticorrupção: quais são os dividendos de integridade de se tornar digital?

Carlos Santiso, Diretor de Inovação Digital do Estado do Banco de Desenvolvimento da América Latina

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A resposta à crise do coronavírus está fornecendo uma oportunidade única para reinventar o governo, reconstruir a confiança e acelerar a luta global contra a corrupção, impulsionada pelo uso mais inteligente de novas tecnologias e análises de dados. A transformação digital é fundamental para os planos de recuperação, que exigirão governo ágil e redução da burocracia, mas também programas de reativação à prova de corrupção. Também exigirá o gerenciamento e a mitigação dos riscos à privacidade e à segurança pública.

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Development Matters
New social contract

La digitalización como estrategia anticorrupción

Por Carlos Santiso, Director, Dirección de innovación digital del estado de CAF – Banco de Desarrollo de América Latina

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La respuesta a la crisis del coronavirus está brindando una oportunidad única para reinventar el gobierno, reconstruir la confianza y acelerar la lucha mundial contra la corrupción, impulsada por el uso más inteligente de las nuevas tecnologías y el análisis de datos. La transformación digital es un aspecto fundamental de los planes de recuperación, que requerirán gobiernos ágiles y reducción de la burocracia, pero también garantías de integridad en el uso de los recursos de los programas de reactivación. También requerirá gestionar y mitigar los riesgos para la privacidad y la ciberseguridad.

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Development Matters
New social contract

Digitalisation as an anti-corruption strategy: what are the integrity dividends of going digital?

By Carlos Santiso, Director, Digital Innovation in Government Directorate, Development Bank of Latin America

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The response to the coronavirus crisis is providing a unique opportunity to “reinvent government”, rebuild trust and accelerate the global fight against corruption, propelled by the smarter use of new technologies and data analytics. Digital transformation is central to recovery plans, which will require agile government and cutting red-tape, but also corruption-proofing reactivation programmes. Additionally, it will require managing and mitigating the risks to privacy and cybersecurity. At a macro level, the correlation between digitalisation and corruption is well established. Digitalisation can disrupt corruption by reducing discretion, increasing transparency, and enabling accountability by dematerialising services and limiting human interactions. Furthermore, it allows for more effective oversight by smarter accountability institutions and data-savvy civil society. However, there is less actionable evidence at the micro level on the effects of specific digitalisation reforms on different types of corruption and the policy channels through which they operate.

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Development Matters
Africa

Revenue mobilisation through tax transparency: Lessons from Uganda’s transformative journey

By John Rujoki Musinguzi, Commissioner General – Uganda Revenue Authority, Mary Baine,Director – Tax Programmes, African Tax Administration Forum, Zayda Manatta, Head of the Secretariat of the Global Forum on Transparency and Exchange of Information for Tax Purposes, and Marcello Estevão, Global Director, Macroeconomics, Trade & Investment, World Bank Group

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Uganda has significantly strengthened its tax transparency and tax capacity in just a few years to mobilise more domestic resources to finance sustainable development. Moreover, the country has taken significant steps to tackle illicit financial flows by implementing global transparency and information exchange standards. The results have been impressive: USD 26 million in additional revenue has been identified since 2014 through audits and exchange of information, USD 22 million of which has already been paid to government coffers.

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Development Matters
Africa, Français

Mobilisation des recettes par la transparence fiscale : Enseignements tirés du parcours transformationnel de l’Ouganda

Par John Rujoki Musinguzi, Directeur général – Autorité fiscale de l’Ouganda, Mary Baine, Directrice – Programmes fiscaux, Forum sur l’administration fiscale africaine, Zayda Manatta, Cheffe du Secrétariat du Forum mondial sur la transparence et l’échange de renseignements à des fins fiscales, et Marcello Estevão, Directeur mondial, Macroéconomie, commerce et investissement, Groupe de la Banque mondiale

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En quelques années seulement, l’Ouganda a considérablement renforcé sa transparence et sa capacité fiscales afin de mobiliser davantage de ressources intérieures pour financer le développement durable. Pour lutter contre les flux financiers illicites, l’Ouganda a pris des mesures considérables pour assurer la mise en œuvre des normes mondiales visant à accroître la transparence et faciliter l’échange de renseignements. Les résultats ont été impressionnants, avec 26 millions USD de recettes supplémentaires identifiées depuis 2014 grâce à des vérifications fiscales et l’échange de renseignements. Sur ces recettes identifiées, 22 millions USD ont déjà été versés dans les caisses de l’État.

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Development Matters
New social contract

Financial integrity for sustainable development

By José Antonio Ocampo, Professor at Columbia University, and former UN Under-Secretary-General for Economic and Social Affairs and Finance Minister of Colombia

The world must curb financial flows associated with tax evasion and avoidance, as well as those obtained through corrupt activities and money laundering. The magnitude of the funds involved is immense; trillions of dollars in bank accounts and other assets, and not just in tax havens. The concealed money drains resources from the hands of governments, generates increasing inequality –because the beneficiaries are generally rich people— and causes significant deterioration in public sector governance worldwide. Increased transparency and accountability to curb these flows would improve governance and enhance fairness at the national and international levels.

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Development Matters