Taxing to develop: When 'third-best' is best

TITLE: Taxing to develop: When 'third-best' is best

AUTHOR(S): Kleven H, Khan A & Kaul U

YEAR: 2016

ABSTRACT: Taxes are a channle of reciprocal exchange between citizens and governments. Taxes increase government accountability, encourage better governance, public service delivery and enforcement of law and order for the protection of citizen rights - essential ingredients for economic growth. Without widespread monitoring and reporting systems to capture and verify financial transactions, many developing country tax systems generate low tax-to-GDP ratios. Effective tax policies must also address tax morale and administration. This brief from the IGC outlines four key ways that developing countries with low information access and enforcement capacity can address tax collection and policy strengthening.