As the world is increasingly interconnected, international taxation – traditionally more of a niche issue for tax lawyers – is receiving more and more attention in wider discussions on economic development: Double tax treaties, or agreements that two countries sign with one another to prevent multinational corporations or individuals from being taxed twice, have become more common, with more than 3,000 in effect today. And while they may contribute to investment, some have also become an instrument for aggressive tax planning.
ANNOUNCEMENT OF THE GLOBAL RIA AWARD 2017
Any visitor to Armenia can testify that the country has delicious food. But diners need to be assured that the khorovats, dolma, or basturma on their plates will not make them sick. How can this be assured?
Some 65 percent of the 320,000 inhabitants of the Brazilian city of Rio Branco use bicycles as their primary mode of transportation, and the popularity of biking is increasing across the country. But Brazil’s 40,000 annual traffic related fatalities makes protective gear a necessity. What is appropriate protection?
Economists tend to agree on the importance of competition for a sound market economy. So what’s the problem when it comes to governments competing to attract investors through the tax treatment they provide? The trouble is that by competing with one another and eroding each other’s revenues, countries end up having to rely on other—typically more distortive—sources of financing or reduce much-needed public spending, or both.
All this has serious implications for developing countries because they are especially reliant on the corporate income tax for revenues. The risk that tax competition will pressure them into tax policies that endanger this key revenue source is therefore particularly worrisome.
In the fiscal transparency arena, people often hear two conflicting claims. First, governments complain that few people take advantage of fiscal information that they make publicly available. Many countries - including fragile and low-income countries such as Togo and Haiti – have been opening up their budgets to public scrutiny by making fiscal data available, often through web portals.
Increasing the supply of fiscal information, however, often does not translate to the adequate demand and usage required to bring some of the intended benefits of transparency such as increased citizen engagement, and accountability. Providing a comprehensive budget dataset to the public does not guarantee that citizens, Civil Society Organizations (CSOs) and the media will start digging through the numbers.
Editor's note: This blog post is part of a series for the 'Bureaucracy Lab', a World Bank initiative to better understand the world's public officials.
“By introducing an automated customer management system we took a noose and put it around our own necks. We are now accountable!”
This reflection from a manager in the Nairobi Public Water and Sewerage utility succinctly captures the impact of MajiVoice, a digital system that logs customer complaints, enables managers to assign the issue to a specific worker, track its resolution, and report back to the customer via an SMS. As a result, complaint resolution rates have doubled, and the time taken to resolve complaints has dropped by 90 percent.
MajiVoice shows that digital technologies can dramatically improve public sector capacity and accountability in otherwise weak governance environments. But is this example replicable? Can the increasingly cheap and ubiquitous digital technologies—there are now 4.7 billion mobile phone users in the world—move the needle on governance and make bureaucrats more accountable?
Performance budgeting (PB) has a deep and enduring appeal. What government would not want to allocate resources in a way that fosters efficiency, effectiveness, transparency, and accountability? However, such aspirations have proven poor predictors of how performance data are actually used.
The potential benefits of identifying and tracking the goals of public spending are undeniable, but have often justified a default adoption of overly complex systems of questionable use. Faith in PB is sustained by a willingness to forget past negative experiences and assume that this time it will be different. Without a significant re-evaluation, PB’s history of disappointment seems likely also to be its future.
In my blog “The Governance Gap – can we bridge it?”, I stressed that strengthened institutions and improved governance are especially critical for the world’s most vulnerable countries in IDA, the World Bank’s Fund for the 77 poorest countries.
IDA is the single largest source of funds for basic social services for these governments and every three years, members representing IDA’s 173 donor and borrowing member countries meet to replenish its resources and refine its priorities.
The introduction of “citizen engagement” into law is an idea that is gaining popularity around the world.
New provisions in Kenya’s recent Constitution enshrine openness, accountability and public participation as guiding principles for public financial management. Yet, as citizen engagement practitioners know, . Experience has shown that in the absence of commitment from leaders and citizens and without appropriate capacities and methodologies, public participation provisions may lead to simple “tick the box” exercises.
Thanks to the support from the Kenya Participatory Budgeting Initiative (KPBI)* and the commitment from West Pokot and Makueni** County leaders, participatory budgeting (PB) is being tested as a way to achieve more inclusive and effective citizen engagement processes while complying with national legal provisions. The initial results are quite encouraging.
Perhaps, as recent events have shown, no greater challenge confronts statesmen and women than this one: when should leaders yield to public opinion and when should they resist it or lead it?
In many democratic societies there is a presumption in favor of yielding to public opinion on the great public issues of the day. Proponents of direct democracy, for instance, argue essentially that leaders should always yield to public opinion. The assumption here, of course, is that you can always trust “the people”. In any case, it is argued, not to trust the people is to favor rule by unaccountable elites, the same people who almost always look after their own interests…and nothing else.
There are at least two problems with always trusting “the people”. The first is the problem of expertise or civic competence. Many public issues are complex and many sided, and you need to be able to wade through boatloads of often contradictory expert opinion. Your average citizen in a democracy, even while reasonably educated, is not likely to be terribly well-informed generally let alone be able to decide complex issues. Deliberative Polls try to solve the problem of expertise by (a) selecting a representative sample of the people (b) exposing them to a full range of expert opinions on the key public issue they will vote on (c) allow them to discuss the issue at length before (d) asking them to vote on the issue. These polls often produce fascinating opinion shifts.
One journalist used it as a data source for a story on solar energy in Makueni County. Another accessed the data for inclusion in a piece on sanitary napkin distribution in East Pokot. Development partners reported relying on the data to coordinate specific activities in the Central Highlands of Kenya. And this is to say nothing of the government users of the data managed by the Electronic Project Monitoring Information System for the Government of Kenya (e-ProMIS), Kenya’s automated information management system on development projects funded by both domestic and foreign resources.