A taxing challenge? Analysing and supporting tax policy design in low and middle income countries

Low income countries typically raise less than 20% of their GDP from taxation, and this affects their ability to invest in human capital and infrastructure, foster equitable growth and reduce poverty. Domestic revenue mobilisation is gaining prominence in the international debate about economic development, however, and is vital to the post-2015 Sustainable Development Goals agenda.

The Centre for Tax Analysis in Developing Countries (TaxDev), an IFS research centre funded by the Department for International Development (DfID), draws on over 40 years of IFS experience of analysing and influencing tax policy in the UK to support policymakers in low and middle income countries to conduct rigorous analysis of their tax and benefit systems.

At this event IFS researchers introduced TaxDev's programme of research and analysis.  This included work on the revenue efficiency and distributional impact of indirect taxes, the effects of tax policy and administration on the behaviour of taxpayers, and the implications for tax design. Particular focus was given to our research in Ethiopia and Ghana, which is being conducted in partnership with civil servants. Following presentations by researchers, a panel of public finance experts reflected on the opportunities and challenges of working with government partners to generate evidence and inform the tax policy-making process.