Taxation and Development: Again

IMF Working Papers, September 1, 2012

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Taxation and Development: Again

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Bibliographic details

• Authors: Michael Keen
• Published: September 1, 2012
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781475510294.001

Summary and central lessons

• Issues of taxation and development have long been a central concern of the IMF and have attracted wider and renewed interest in recent years.
• The paper reflects on three broad lessons of experience:
  • Developing countries differ vastly in tax matters, and in ways that are less than fully understood.
  • The history of ‘big ideas’ in guiding tax reform for developing countries is decidedly mixed.
  • The value of the emphasis often placed in this context on ‘informality’ is decidedly limited.
• The paper also asks whether ideas of ‘state building’ emphasized in some recent literature are likely to lead to practical advice much different from that commonly offered now.

Findings and analysis

• Heterogeneity:
  • Developing countries exhibit vast differences in tax matters; these differences are not fully understood.
• Assessment of reform paradigms:
  • The record of ‘big ideas’ for tax reform in developing countries is described as decidedly mixed.
• Role of informality:
  • Emphasis on ‘informality’ in the taxation and development debate is characterized as decidedly limited in value.
• State-building literature:
  • The paper questions whether state-building ideas in recent literature would alter practical tax policy advice compared with current approaches.

Policy implications and considerations

• Tailor tax advice and reform strategies to country-specific tax structures and contexts rather than relying solely on broad “big idea” prescriptions.
• Exercise caution in overemphasizing informality as a central explanation or policy target for tax performance in developing countries.
• Evaluate whether state-building frameworks produce materially different practical recommendations for tax policy and administration before adopting them as distinct policy guidance.

Content in this bundle

• Taxation and Development--Again; by Michael Keen; IMF Working Paper 12/220; September 1, 2012
  • Taxation and Development--Again; by Michael Keen; IMF Working Paper 12/220; September 1, 2012 (Markdown version)
  • Taxation and Development--Again; by Michael Keen; IMF Working Paper 12/220; September 1, 2012 (PDF)