Using Local IT Solutions to Improve Local Government Tax Reform

Appropriate information technology systems are critical to realising the local government tax reforms that are the focus of growing international attention. The two systems frequently favoured by donors and governments are sophisticated international systems, which offer the (elusive) promise of transformation, or, tailored systems developed locally by donors themselves, which promise low cost and local appropriateness. However, international solutions are often high cost and poorly suited to local needs, while donor-led solutions risk a lack of sustainability. Using locally developed, frequently open source, private sector solutions can offer a superior option. However, their adoption requires commitment by donors and governments, including overcoming entrenched decision-making biases.DFI

Electoral Competitiveness, Political Budget Cycles and Taxation in Developing Countries

political budget cycles; fiscal policy; taxation; political economy.Despite significant evidence of ‘political budget cycles’ affecting public expenditure, studies of the impact of elections on tax collection have reached mixed conclusions. Drawing on significantly improved government revenue data, this paper finds, contrary to earlier research, that when we focus on all executive elections in developing countries there is no significant effect on levels of tax collection. Instead, the impact of elections on tax collection is conditional on elections being competitive, with competitive elections resulting in a negative impact on pre-election tax collection, split relatively evenly between direct and indirect taxes. The magnitude of the effect is large, reaching as much as 0.5 per cent of GDP in some specifications, and has important implications for understanding the incentive effects of elections and the connections between elections and effective governance.DfID, NORA

Linking Beneficial Ownership Transparency to Improved Tax Revenue Collection in Developing Countries

Recent years have witnessed an accelerating push to expand access to information on the beneficial ownership of corporate entities, in an effort to bring greater transparency to multinational corporation (MNC) tax strategies, identify personal tax-evading wealth held overseas and combat global networks of criminality and corruption. This effort remains in its infancy, but has made important strides: the G20 has called for all countries to develop and share registers of beneficial ownership, and various jurisdictions have begun to do so.DfIDBill and Melinda Gates Foundatio

China’s challenge to international tax rules

States are currently struggling to reach global agreement on the taxation of digital firms such as Apple and Google, suggesting that an international regime characterised by impressive coherence over a century may be beginning to fragment. While work on the politics of the international tax regime is still largely preoccupied with the US, a ‘great power’, this fragmentation largely reflects the US’s inability to prevent other countries from acting

Rebuilding Local Government Finances After Conflict: Lessons from a Property Tax Reform Programme in Post-Conflict Sierra Leone

This research interrogates the factors underpinning the relative success of a property tax reform programme in Sierra Leone. Recognising the importance of politics in shaping reform outcomes, it highlights reform strategies that have contributed to overcoming both technical and political barriers to reform. It highlights three interconnected arguments. First, there is a need for long-term, hands-on, local partnerships that support local capacity, help to confront political resistance and build a constituency for reform. Second, there should be expanded focus on politically contentious efforts to strengthen transparency, public outreach, and enforcement among elites, as they are critical to programme success and sustainability. Third, a focus on the same politically contentious elements of reform can help external actors better assess the extent of local political commitment to reform early-on, and thus target reform funding and efforts more effectively

The Political Economy of Property Tax in Africa: Explaining Reform Outcomes in Sierra Leone

Effective local government taxation is critical to achieving the governance benefits widely attributed to decentralization, but in practice successful tax reform has been rare because of entrenched political resistance. This article offers new insights into the political dynamics of property tax reform through a case study of Sierra Leone, focusing on variation in experiences and outcomes across the country’s four largest city councils. Based on this evidence, the article argues that elite resistance has posed a particularly acute barrier to local government tax reform, but that ethnic diversity has sometimes served to strengthen reform by fragmenting elite resistance. Furthermore, opposition councils have had stronger incentives to strengthen tax collection than councils dominated by the ruling party, in order to increase their fiscal autonomy. More generally, heightened electoral competition can lead to sustained revenue gains by encouraging city councils to adopt a more contractual approach to tax reform that stresses transparency, engagement, and equity

Taxation, Non-Tax Revenue and Democracy: New Evidence Using New Cross-Country Data

taxation, non-tax revenue, accountability, resource curse.A large body of cross-country econometric research has investigated the possibility of a political resource curse, by which access to extensive natural resources reduces the extent of democracy and accountability. However, this literature has been plagued by problematic data and correspondingly inappropriate model specification. Dominant theories of the political resource curse focus on the political consequences of differences in the composition of government revenue, with greater reliance on non-tax revenue undermining democracy. However, most studies do not actually test this relationship: owing to the poor quality of government revenue data, they have focused instead on the impact of total resource income on democracy – a reasonable, but imperfect, approximation of the actual theory. Meanwhile, the robustness of those few studies that have focused on government revenue specifically is undermined by poor data quality. We overcome this problem by drawing on the newlycreated ICTD Government Revenue Dataset, which dramatically improves the quality of existing data and allows us to test directly the connection between the composition of government revenue and democracy. Employing this new data we re-test the most compelling econometric approaches from the existing literature, finding support for the existence of a political resource curse.DfID, NORA