Ideas to Action:

Independent research for global prosperity

Tag: taxes

 

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.

 

Pinning Down Illicit Financial Flows: Why Definitions Matter

The SDGs include a target to “significantly reduce illicit financial and arms flows, strengthen the recovery and return of stolen assets and combat all forms of organised crime”. However, there is no globally agreed upon definition for “illicit financial flows.” My new CGD paper looks at why there is so much disagreement and confusion over this term.

Publications

Illicit financial flows (IFFs) connected with corruption, crime, and tax evasion are an issue of increasing concern. However, there is not yet a clear consensus on how to define illicit financial flows, and even less on how to measure them.

Publications

This paper looks at estimates of the potential gains from taxing across borders, alongside largely domestic measures such as property tax, personal income tax, VAT, and tobacco taxes. It finds that while action on cross-border taxation could yield additional tax take in the region of one percent of GDP, in many countries measures targeting the domestic tax base might deliver something in the region of nine percent. The main enabler is political commitment.

Publications

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.

Tax and Development: Beyond the Big Numbers

Discussion on tax and development can be incoherent, both within and between different sectors. A symptom of this is the tendency for inflated expectations about the scale of revenues at stake in relation to multinational corporations and misunderstandings and contested definitions on the issue of illicit financial flows.

Can Taxes Postpone Millions of Deaths Worldwide? A New Task Force Led by Michael Bloomberg and Lawrence Summers Inquires

This week, Mayor Michael Bloomberg and former Treasury Secretary Lawrence Summers announced a new Task Force on Fiscal Policy for Health. This is the first time such a high-level group of respected economic and fiscal policy opinion leaders has convened on this issue, creating an opportunity to acknowledge the importance of taxes for promoting health and to take action to save lives.

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