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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.

Why Development Finance Institutions Use Tax Havens

Development Finance Institutions (DFIs) exist to promote development by investing in the poorest, least developed countries. They often route those investments via holding companies or private equity funds domiciled in tax havens. On the face of it, that seems absurd: tax havens are widely seen as a drain on development, depriving cash-strapped governments of billions of dollars in public revenue. In a new paper I argue that whilst widespread opposition to DFIs investing via tax havens is understandable, it is misguided. Banning the use of tax havens would do more harm than good. 

The Good, the Bad, and the Ugly: How Do Tax Incentives Impact Investment?

There are arguments for and against “spending through the tax system.” On one hand tax incentives are relatively easy to implement; they don’t require an outlay of cash and they make use of information that revenue agencies already collect. But on the other, loading the tax system with too many policy objectives conflicts with the drive for a coherent, simple, transparent tax system. Despite decades of advice from international organisations to curtail tax incentives, they remain a popular tool for governments.