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A table showing tax revenue as a share of GDP in sub-Saharan Africa

Enhancing Domestic Resource Mobilization: What are the Real Obstacles?

At the Center for Global Development, we recently initiated a project to develop more effective and equitable strategies for domestic resource mobilization in low-income countries in sub-Saharan Africa (SSA). The impetus for the project is the Addis Ababa Action Agenda for financing development, which calls on developing countries to step up their efforts to collect more taxes domestically to achieve the Sustainable Development Goals (SDGs). 

Exaggerating Multinational Tax Avoidance Does Not Help Africa

Matti Kohonen of Christian Aid holds out the enticing prospect that African countries could collect an additional 1.5 percent of gross domestic product in tax if only big multinationals would stop dodging. The problem is that this estimate is (still) based on wishful thinking. Multinational corporations should pay tax, but the scale of potential revenues depend on underlying levels of investment and profitability in a country. 

Photo of Calculator

A New Standard for Country-by-Country Reporting on Tax?

The vexed question of whether country-by-country (CBC) reports on multinational companies’ tax affairs should be put into the public domain has been a sticking point in debates on responsible tax practice for years. 

Figure 1: Tax Expenditure as a % of GDP

Time to Pay More Attention to Tax Expenditures?

It is time that donors and technical assistance providers turn their attention to tax concessions provided by developing countries struggling to raise more taxes from domestic sources. The granting of tax concessions is not only mostly opaque and prone to corruption, but these concessions are further constricting the already narrow tax base of countries, thereby undermining the Addis Ababa Action Agenda to promote domestic resource mobilization. There is a risk that additional revenues collected through tax reforms may be lost through tax concessions.

The Proposed SDG Indicator on Illicit Financial Flows Risks Conflating Ordinary Business and Dirty Money

“Illicit financial flows” means dirty money crossing borders. It is an umbrella term which covers diverse actors including organised crime groups, business people making bribes, political leaders engaging in grand corruption, and major tax evaders hiding undeclared wealth. What they all have in common is that what they are doing is illegal (although they may be getting away with it), and they often use opaque international networks of legal entities, bank accounts, and property holdings to facilitate and store ill-gotten gains. There is a clear development case for rich countries to act to prevent their financial systems being used as havens for illicit financial flows that harm developing countries.

Detail of chart showing that taxes can exacerbate poverty in the poorest countries

Chart of the Week: Taxing the Poor to Give to the Bureaucrat?

The world’s poorest people have been getting richer recently. But they remain incredibly poor. The 10 percent of the world’s population still consuming $1.90 or less a day are subsisting on a small fraction of the resources available to people at the US poverty line. So you’d hope that the governments of the countries where they live would be trying to raise their consumption levels. But the reality is more complex.

On the Equity-Friendly Property Tax: Time for Developing Countries to Invest?

A large proportion of revenue gains over the last two decades has come from countries’ efforts to improve the design and compliance of consumption and other indirect taxes, particularly the VAT (value-added tax); in doing so, the objective has been to  minimize VAT’s regressive effects by exempting sales of small businesses below a threshold (where the poor typically tend to buy) as well as imposing zero tax on certain food and other products which take up a large proportion of consumption of poor households. Less attention has gone to expanding the coverage of potentially more progressive taxes, such as personal income and property taxes.

The Mongolian Millions: What Can We Learn from the Making of a Multinational Tax Avoidance Scandal?

Earlier this year, The Centre for Research on Multinational Corporations (“SOMO”; a Dutch NGO) issued a report about an international mining company they said had avoided paying $232 million USD in taxes in Mongolia. The Oyu Tolgoi mine is considered a big deal in Mongolia and has been subject to lengthy negotiations on how to split the risks, costs, and profits of the project between the company and the government. While this question is of primary interest to the people of Mongolia, I think that delving into the detail of individual cases like this is also important for clarifying the broader debates and understanding of tax issues.

 

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