Tax and Development: New Frontiers of Research and Action (Brief)

Key Takeaways

• Both international and domestic action are important for mobilising domestic resources through taxation. 
• Expectations of the revenue at stake from international tax issues are often inflated, with hopes of massive increases in health and education budgets from taxes on multinational corporations and offshore wealth.
• Domestic measures have greater potential for raising tax yields over time. Rough estimates indicate that there may be $9 of additional tax capacity from domestic policy measures for every $1 from international action. The main enabler is political commitment.
• This is a dilemma for international players concerned with domestic resource mobilization; international tax issues are salient, accessible, and morally attractive, but can distract government and civil society from how tax revenues within a country are collected and spent.
• Taxpayers accessible to international rules and influence should be viewed not only as potential sources of incremental tax revenues, but as potential players in constituencies for reform in a transition from “deals to rules” in productive economies.