What Have We Learned About Tax and Governance?

WilsonPrichardResearchDirector

Interna3onalCenterforTaxandDevelopment

The Tax-Governance Connection

Expandedtaxa3onmaycontributetoimprovedgovernanceintwokeyways:1.  Taxa3onmaybecomeleadingedgeof

buildingstatecapacity

2.  Taxa3onmayspur‘taxbargaining’andexpandedresponsivenessandaccountability

An Agenda for Action

“Weshouldelevateourselvesfrombeingjusttaxcollectorsandtaxadministratorstobeingstatebuilders”-UgandaRevenueAuthorityCommissionerGeneralAllenKaginaatthelaunchofATAF

The ProblemThesetax-governanceconnec3onsarepowerfulintheory,buttheyremainrela3velyabstract:1.  Whatexactlydotheseprocesseslooklikeinprac3ce?

2.  Whatarethepolicyimplica3ons,forthoseseekingtolinktaxtobroadergovernancegains?

Cri3cally,theseposi3veconnec3onsarenotguaranteed,butdependonpolicyandcontext–andthusexpliciteffortstostrengthentheselinks

Tax and Statebuilding

Wes3llhavelimitedevidenceonhowthisworks,butseveralkeyelementsnowclear:1.   DemonstraGoneffects:Taxagenciespioneer

newprocesses2.   Spillovereffects:Improvingtaxa3onrequires

parallelimprovementselsewhere3.   InformaGonsharingeffect:Taxdatasupports

beNerpolicy,andotherdatasupportstax

Tax and Accountability

Strongevidenceofdiversityandcomplexityofrelevantprocesses:1.   Directtaxbargaining:Governmentsand

taxpayersmakereciprocalcommitments2.   StrengthenedCivilSociety:Taxspurs

organizingandengagement3.   SustainedTaxResistance:Resistanceto

unpopulartaxa3oncreatesreformpressure

Building Local Government

Alloftheseprocessescanbepar3cularlystrongatthelocalgovernmentlevel,wheretaxisclosetoci3zensandgovernmentcapacitylimited.But….Strengtheningcoopera3vetaxcollec3onatlocalleveloUenpar3cularlydifficultowingtoweakincen3ves,elitecapture,weakcollec3veac3onandwidespreadinformality

Policy Implications: Statebuilding

1)  Buildstronglinksbetweentaxagenciesandrelatedbranchesingovernment

2)  Emphasizeeffec3vedatagathering,andonsharingdataacrossgovernment,

3)  Emphasizebureaucra3creformsthatcouldbereplicatedelsewhereingovernment–likemeritocra3chiring,orperformanceevalua3on–ratherthanmakingRAsislands;

4)  Strengthenlinksbetweencentralandlocaladministra3ons

Policy Implications: Accountability

1.  Enhancethepoli3calsalienceoftaxa3on–includingviadirecttaxes

2.  Focusonhorizontalequityintaxenforcement3.  Expandtransparencyaroundtaxa3onand

budge3ng–including,possibly,someearmarking

4.  Directlysupportpopularengagement,includinginclusiveins3tu3onalspacesfortaxbargaining

The Road Forward1.  Focusresearchnotontheabstract

rela3onship,butprac3calimplica3ons

2.  Scopetofurtherexploretheimplica3onsofthesetypesofpolicymeasuresinprac3ce,includingpartnershipswithgovernments

3.  Expandresearchincreasinglytothelocal

governmentlevelaswell