Tax for Poverty Reduction. Max Everest-Phillips DFID London HMRC conference 21 September 2009. OUTLINE. Development and Taxation What Have We Done? What Have We Learnt? Tax and: Economic Development Growth Global Trends Tax Administration Governance What we are doing.
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21 September 2009
Increasing tax revenues combined with sustainable economic growth eventual exit strategy for developing countries from aid dependency.
Taxes, if designed well, can promote economic growth, lessen extreme inequalities, tackle climate change and fund the delivery of the MDGs, significantly improving the lives of all citizens and especially poor people.
Tax is a core part of state-building
Taxes shape investment and economic growth: tax revenues that increase with economic growth ensure sustainable funding of essential public services for poor people: ‘public goods’ such as security, health and education on which economic growth and social development depend.
Gender issues around taxation poorly understood
Tax is central to the ‘Monterrey Consensus’ by which developing countries committed themselves to deliver ‘effective, efficient, transparent and accountable’ taxation systems, in return for increased international development assistance. Developing countries must be able to show their serious intent to maintain this commitment.
Evidence of partner countries’ ‘tax effort’ matters for sustaining public support in OECD countries for international development.
Number of different estimates:
Revenue Ratios expected to fall by 2% or more in a quarter of LICsDiminished Fiscal Position
Understand Tax as State-Building: the ‘Fiscal Social Contract’ – critical in states with weak governance and limited legitimacy
Political economy matters:
Tax as SYSTEM:
Political culture: Social Contract
Political commitment to ‘Rule of Law’
‘National Purpose’ – ie. Equity and Economic growth
Against background of:
Ongoing bilateral country programmes
With World Bank:
With International Tax Dialogue
With Civil Society
How can developing states successfully raise domestic revenues in ways that promote political stability, economic growth and social cohesion?