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Taxes

Getting to 15 percent: addressing the largest tax gaps

Raul Felix Junquera-Varela's picture
Photo: Tony Webster/Flickr. Graphic: Nicholas Nam/World Bank
Tax revenues above 15 percent of a country’s gross domestic product (GDP) are a key ingredient for economic growth and, ultimately, poverty reduction.

The ongoing impact of ‘nudging’ people to pay their taxes

Oscar Calvo-González's picture
© Maria Fleischmann/World Bank
© Maria Fleischmann/World Bank

Sustainability is the holy grail of development. There are many interventions that yield positive results in the short term but somehow fail to be sustained over time. This is why the experience in Guatemala that we are about to describe is worth paying attention to. In short, it shows that behavioral insights can lead to lasting change.

It all began in 2012 in the United Kingdom, with simple changes in the reminder letters sent to taxpayers that were late in their income tax payment. The changes were very successful, inducing payments of 4.9 million pounds (around $6.5 million) in a sample of almost 120,000 delinquent taxpayers, which would not have been raised without the intervention. The then-nascent institution called the "Behavioral Insights Team" (BIT) became known around the world with this effective and very low-cost intervention that was based on modifying the messages of the letters sent to delinquent taxpayers. The message that was most effective said: "Nine out of ten people in the U.K. pay their taxes on time. You are currently in the very small minority of people who have not paid us yet." Behavioral science experts have been able to show that telling people what most people do, especially when it comes to positive behavior, is a good technique to change behavior.

The rich can stop feeling guilty – and start paying taxes

Davida Connon's picture

Tax avoidance by the world’s wealthiest people and largest companies is widespread. The excuse is that such avoidance is legal. Rich individuals and corporations look for jurisdictions that have low or no tax on personal or corporate income, on dividends, on capital or R&D expenditure. They base their business activities there, at least for the purposes of taxation.

Sustainable development requires a higher domestic revenue effort

Christina Malmberg Calvo's picture

Uganda Revenue authority officials tend to taxpayers during customer appreciation week in Kampala. Photo: Morgan Mbabazi/World Bank.

Less than one million people and about 40,000 firms are registered as tax payers in Uganda. That’s less than 7% of the total working age population, and less than 10% of firms with a fixed location, respectively.  

Taxes for Better Health: Making the Case at the Joint Learning Network

Patricio V. Marquez's picture

This blog first appeared on Joint Learning Network for Universal Health Coverage

Adam Smith, the 18th century social philosopher and political economist, renowned as the father of modern economics, observed in his seminal work “The Wealth of Nations” that “sugar, rum, and tobacco are commodities which are nowhere necessaries of life, [but] which are ... objects of almost universal consumption, and which are therefore extremely proper subjects of taxation.” 

How do taxes and transfers impact poverty and inequality in developing countries?

Gabriela Inchauste's picture

We know that fiscal policy can be harnessed to reduce inequality in low- and middle-income countries, but until now, we knew less about its ability to reduce poverty. Our recent volume looks at the revenue and spending of governments across eight low and middle income countries (Armenia, Ethiopia, Georgia, Indonesia, Jordan, Russia, South Africa and Sri Lanka), and it reveals that fiscal systems, while nearly always reducing inequality, can often worsen poverty.   

Boosting revenues, driving development: Join us to discuss!

Julia Oliver's picture


In a live-streamed event from 1 pm to 2 pm EST on Friday, April 21, the World Bank will host a discussion of a critical development issue: Taxes. The event, Boosting Revenues, Driving Development: Why Taxes are Critical for Growth, will include an illustrious list of panelists, representing many different perspectives:

Financing Côte d’Ivoire’s Emergence Starts with a Social Contract

Jacques Morisset's picture
In Côte d’Ivoire, only 15% of savings are allocated to financial institutions such as banks, microfinance companies, and mobile money accounts.
In Côte d’Ivoire, only 15% of savings are allocated to financial institutions such as banks, microfinance companies, and mobile money accounts. 

The wealthy can borrow money to finance their investment needs because bankers trust them. Those who are less well off, and who need loans the most, do not have this access and must call upon the solidarity of their family and community to finance their investments. The same logic can be used at the country level. High income countries borrow, while many poor African countries have a limited access to international capital markets. In recent years, only one fourth of sub-Saharan African countries were able to issue international bonds—and do not have any other alternative but to solicit international aid.

How can we better help governments to help citizens? Seeking feedback on best practices in building tax capacity

Jim Brumby's picture

In April, the World Bank Group joined forces with the International Monetary Fund (IMF), the Organisation for Co-Operation and Development (OECD), and the United Nations (UN) to form the Platform for Collaboration on Tax with the aim of providing better coordination and support to developing countries on tax matters. Among the responsibilities of this new group are to formalize regular discussions among our organizations on standards for international tax issues, strengthen our capacity-building support, deliver joint guidance, and share information on our ongoing work.
 
To that end, we have produced a short guidance note that we expect to present to the G20 in July: “Report on Effective Capacity Building on Tax Matters in Developing Countries”. In preparing this note, our experts have compiled research, reached into their extensive experience on the ground, and incorporated comments from country-level practitioners at a number of meetings – in Tanzania, South Korea, and Washington, D.C. – that were designed to highlight the developing-country perspective. But we know there is more to learn, and before we finalize this note, we would like to hear from you, whether you are a representative from a civil society organization, a tax official, or a citizen who is interested in how your government sets and collects taxes.
 
Deadline: July 8
Where to send feedback: [email protected]
Next steps: Keep your eye on this space. While we are setting a short deadline for this particular project, we hope to keep the conversation going, and will engage with you on many of the initiatives we have planned.

All’s fair in love and (the global tax) wars?

Jim Brumby's picture




The mishmash of overlapping and incoherent national tax policies and systems, which together comprise the global tax architecture, used to be a niche topic relegated to the fringes of global policy debates and the domain of a small number of technical experts. But the leak of the “Panama Papers” in April thrust these issues into the spotlight anew.

This added fuel to the fire that was started by the 2012 Amazon and Google cases and subsequent initial high-profile leaks that first brought international tax policy under public and legislative scrutiny. The technicalities of issues such as transfer pricing, offshore financial centers, aggressive tax planning and tax minimization, and illicit financial flows involving public officials have gained the attention of the media and taxpayers around the world.


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