Donors, Aid and Taxation in Developing Countries: An Overview

ICTD Working Paper 6

44 Pages Posted: 15 Mar 2014

See all articles by Wilson Prichard

Wilson Prichard

University of Toronto - Institute of Development Studies (IDS)

Jean-Francois Brun

Universite d'Auvergne - Clermont 1 - CERDI

Oliver Morrissey

University of Nottingham - Development Economics

Date Written: September 1, 2012

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.

Keywords: ICTD, Taxation, Tax Reform, Foreign Aid, Donors, Tax Effort, Conditionality

Suggested Citation

Prichard, Wilson and Brun, Jean-Francois and Morrissey, Oliver, Donors, Aid and Taxation in Developing Countries: An Overview (September 1, 2012). ICTD Working Paper 6, Available at SSRN: https://ssrn.com/abstract=2408605 or http://dx.doi.org/10.2139/ssrn.2408605

Wilson Prichard (Contact Author)

University of Toronto - Institute of Development Studies (IDS) ( email )

Library Road
Brighton, Toronto BN1 9RE
United Kingdom

Jean-Francois Brun

Universite d'Auvergne - Clermont 1 - CERDI ( email )

65 Boulevard Francois Mitterrand
63000 Clermont-Ferrand Cedex 1
France

Oliver Morrissey

University of Nottingham - Development Economics ( email )

University Park
Nottingham, NG8 1BB
United Kingdom
+44 (0)115 9515475 (Phone)
+44 (0)115 951 4159 (Fax)

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