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Donors, Aid and Taxation in Developing Countries: An Overview

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  • Prichard, Wilson
  • Brun, Jean-Francois
  • Morrissey, Oliver

Abstract

Recent years have witnessed rapidly growing donor interest in tax issues in the developing world. This reflects a concern with revenue collection to finance public spending, but also recognition of the centrality of taxation to growth, redistribution and broader state-building and governance goals. Against this backdrop, this paper identifies a series of key issues that demand attention if donors are to improve the quality of their support for tax reform. The focus is not, primarily, on the technical design of tax interventions, but, instead, on seven ‘big picture’ considerations for the design of donor programmes: (a) supporting local leadership of reform efforts; (b) incorporating more systematic political economy analysis into the design and implementation of reform programmes; (c) designing tax reform programmes that seek to foster broader linkages between taxation, state-building and governance; (d) paying careful attention to the complexity of the relationship between aid and tax effort; (e) better designing tax-related conditionality, particularly by developing a more nuanced set of performance indicators; (f) ensuring the effective coordination of donor interventions; and (g) paying greater attention to the international policy context, and particularly the role of tax exemptions for donor projects, tax havens and tax evasion by multinational corporations (MNCs) in undermining developing country tax systems.

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  • Prichard, Wilson & Brun, Jean-Francois & Morrissey, Oliver, 2012. "Donors, Aid and Taxation in Developing Countries: An Overview," Working Papers 2307, Institute of Development Studies, International Centre for Tax and Development.
    • Handle: RePEc:idq:ictduk:2307
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    Cited by:

    1. Patrick Guillaumont & Laurent Wagner, 2014. "Aid Effectiveness for Poverty Reduction: Lessons from Cross‑country Analyses, with a Special Focus on Vulnerable Countries," Revue d’économie du développement, De Boeck Université, vol. 22(HS01), pages 217-261.
    2. Djedje Hermann YOHOU & Michaël GOUJON, 2017. "Reassessing Tax Effort in Developing Countries: a Proposal of a Vulnerability-Adjusted Tax Effort Index (VATEI)," Working Papers P186, FERDI.
    3. Fjeldstad, Odd-Helge, 2013. "Taxation and Development: a Review of Donor Support to Strengthen Tax Systems in Developing Countries," Working Papers 13683, Institute of Development Studies, International Centre for Tax and Development.
    4. van den Boogaard, Vanessa & Prichard, Wilson & Milicic, Nikola & Benson, Matthew, 2016. "Tax Revenue Mobilization in Conflict-Affected Developing Countries," Working Papers 13551, Institute of Development Studies, International Centre for Tax and Development.
    5. Djedje Hermann Yohou & Michaël Goujon & Bertrand Laporte & Samuel Guérineau, 2016. "Is Aid Unfriendly to Tax? African Evidence of Heterogeneous Direct and Indirect Effects," Working Papers halshs-01321620, HAL.
    6. Hermann D. Yohou & Michaël Goujon & Wautabouna Ouattara, 2016. "Heterogeneous Aid Effects on Tax Revenues: Accounting for Government Stability in WAEMU Countries," Journal of African Economies, Centre for the Study of African Economies, vol. 25(3), pages 468-498.
    7. Vanessa van den Boogaard & Wilson Prichard & Nikola Milicic & Matthew Benson, 2016. "Tax revenue mobilization in conflict-affected developing countries," WIDER Working Paper Series 155, World Institute for Development Economic Research (UNU-WIDER).
    8. Joshi, Anuradha & Prichard, Wilson & Heady, Christopher, 2014. "Taxing the Informal Economy: The Current State of Knowledge and Agendas for Future Research," Working Papers 13663, Institute of Development Studies, International Centre for Tax and Development.
    9. Giulia Mascagni, 2016. "Aid and Taxation in Ethiopia," Journal of Development Studies, Taylor & Francis Journals, vol. 52(12), pages 1744-1758, December.
    10. Adeniyi, Oluwatosin & Kumeka, Terver Theophilus & Alagbada, Oladimeji, 2022. "Natural Resource Dependence and Tax Effort in Sub-Saharan Africa," Journal of Economic Development, The Economic Research Institute, Chung-Ang University, vol. 47(1), pages 29-64, March.
    11. Émilie Caldeira & Anne-Marie Geourjon & Grégoire Rota-Graziosi, 2020. "Taxing aid: the end of a paradox?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(1), pages 240-255, February.
    12. Hassan, Mirza & Prichard, Wilson, 2016. "The Political Economy of Domestic Tax Reform in Bangladesh: Political Settlements, Informal Institutions and the Negotiation of Reform," Working Papers 13681, Institute of Development Studies, International Centre for Tax and Development.
    13. Kohler, Pierre, 2014. "Asset-Centred Redistributive Policies for Sustainable Development," MPRA Paper 55357, University Library of Munich, Germany.
    14. Anuradha Joshi & Wilson Prichard & Christopher Heady, 2014. "Taxing the Informal Economy: The Current State of Knowledge and Agendas for Future Research," Journal of Development Studies, Taylor & Francis Journals, vol. 50(10), pages 1325-1347, November.
    15. Vanessa van den Boogaard & Wilson Prichard & Nikola Milicic & Matthew Benson, 2016. "Tax revenue mobilization in conflict-affected developing countries," WIDER Working Paper Series wp-2016-155, World Institute for Development Economic Research (UNU-WIDER).
    16. Fjeldstad, Odd-Helge, 2013. "Taxation and Development : A Review of Donor Support to Strengthen Tax Systems in Developing Countries," WIDER Working Paper Series 010, World Institute for Development Economic Research (UNU-WIDER).

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    Keywords

    Aid; Finance; Governance;
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