Donors, Aid and Taxation in Developing Countries -- An Overview

Abstract

We are pleased to present the fourth in our new publication series, ICTD Research in Brief -- two-page summaries of our working papers edited to capture the main policy messages and aimed at policy makers, tax administrators, fellow researchers and anyone else who is big on interest and short on time. We hope you enjoy it. There is growing interest among development policymakers in taxation, both as a crucial source of revenue for development and because taxation is central to economic growth, redistribution and broader state-building and governance goals. This paper explores the direct impact of donor supported tax reform efforts; the indirect impact of aid and related donor policies on domestic tax effort; the potentially perverse effects of tax-related conditionality; and the impact of broader donor policies including global tax arrangements. It makes detailed recommendations about future donor support for tax reform.

Keywords: taxation; tax reform; foreign aid; donors; tax effort; conditionality, Research in Brief