Ideas to Action:

Independent research for global prosperity

Views from the Center

CGD experts offer ideas and analysis to improve international development policy. Also check out our Global Health blog and US Development Policy blog.

 

COVID-19 and Seizing the Opportunity for Reforming Tax Expenditures in Africa

In this blog post, we argue that the COVID-19 crisis has made it imperative for developing countries to begin reforming their tax systems to generate more resources domestically—reforms which they have postponed until now because of vested interests. Reforming tax expenditures would not only generate additional revenues, but it would also improve taxpayer perception of the fairness of the tax system and enhance budget transparency.

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. 

Talking about Tax Is Taxing: Pretending It Is Simple Will Hurt the Poor

Here’s an obvious truth: tax lost to trade misinvoicing in Africa does not equal tax lost to transfer mispricing by multinational corporations in Sierra Leone, which does not equal lost health-care spending. Unfortunately, a policy paper released on Tuesday by Oxfam makes exactly these equivalences. This sort of imprecision is widespread, and it’s not going to help the poor.