One area that holds potential for additional revenues is rationalization of tax expenditures—the many tax breaks, exemptions, and incentives that governments provide to various actors.
While tax expenditures can be an important tool for fiscal policy to pursue different policy goals such as creating employment, attracting foreign investment, or greening the economy, they are often opaque, costly, and ineffective as well as politically motivated.
Against this backdrop, reforming and rationalizing inefficient and obsolete tax expenditures can be highly beneficial for developing economies and could have a significant impact on countries’ capacity to mobilize domestic resources and finance governments’ development strategies. Tax expenditures represent a large revenue loss for governments across the world. During the 1990-2020 period covered by the Global Tax Expenditures Database (GTED), the average revenue forgone through tax expenditures for the 13 low-income countries in the database stood at around 2.8 percent of GDP and 27.1 percent of tax revenue, while for the 26 lower-middle-income countries in the database it stood at 2.6 percent of GDP and 18.2 percent of tax revenue. Identifying and reforming (or simply eliminating) those tax expenditures that do not provide value for money, or that trigger significant negative socioeconomic externalities, could help generate resources necessary to help countries in the post-pandemic recovery phase, and ultimately in the pursuit of long-term development objectives such as those included in the Sustainable Development Goals (SDGs).
Rationalization of tax expenditures, however, requires understanding the considerations that lie behind their governance, and the reforms that might be necessary for a more careful and rational approach towards proposing, adopting, and monitoring them. Unfortunately, these aspects of public policy have been mostly neglected, and there is limited evidence on how governments manage tax expenditures in practice.
Two recent papers shed some light on these issues, providing new evidence on how tax expenditures—and investment incentives in particular—are used and governed across developing countries.
The OECD recently published a paper that presents initial insights from an investment tax incentives database covering 36 developing countries across Eurasia, the Middle East, North Africa, Southeast Asia, and Sub-Saharan Africa. The paper shows that the design of tax incentives is often specific to a certain sector, region, or investor within a country. Lack of transparency through complex targeting may inhibit the analysis of tax incentives, including whether they reach their stated objectives and at what costs, and can provide opportunities for abuse. The study also provides detailed insights on the governance of investment tax incentives, which it finds to be overly complex in most cases. Many countries scatter incentive provisions across several laws and only 40 percent of countries provide investment tax incentives through one legislative piece. Similarly, multiple authorities share responsibility to govern tax incentives in the majority of countries. Such complexities and overlapping responsibilities can further limit transparency and accountability of governments, which risks reducing the effectiveness of the policy and can increase discretionary behavior.
The International Budget Partnership published a study based on research in nine Latin American countries, assessing current arrangements to manage tax expenditures against some good practice principles that have been promoted by the IMF, OECD, World Bank, and UN. The study documents a clear legislative and regulatory gap, as no country has a comprehensive, organic law that regulates how tax expenditures should be created, managed, and evaluated. Instead, as found in the OECD study, tax expenditure provisions are usually scattered among numerous laws of different types, with clear limitations in the provisions included. Moreover, and again echoing the OECD study, the role that different actors play in the introduction and implementation of tax expenditures generates dysfunctional systems where nobody holds overall responsibility for the effective management of tax expenditures as fiscal policy instruments, and where governments are not held accountable for the impact of tax expenditures.
The evidence from these two recent publications provides useful insights to guide tax expenditure reform and help turn tax expenditures into more effective fiscal policy instruments that can contribute to increasing—instead of limiting—revenue collection. Some of the main takeaways include:
• There’s a need to improve the legislative and regulatory framework surrounding the management of tax expenditures, ideally introducing legislation that sets the basic rules for tax expenditure governance, or ensuring that all tax expenditures are captured in the relevant tax laws and not in secondary legislation.
• Governments should address the fragmentation of responsibilities for the management of tax expenditures, and concentrate the key powers of appraisal, approval, and monitoring within the ministry responsible for overall fiscal policy. Encouragingly, the Addis Tax Initiative (ATI) has included a similar provision in its post-2020 monitoring framework.
• It is important to improve the scope and quality of tax expenditure information provided by governments. According to the recently published GTED Progress Report 2022, among the 82 low- and low-middle income economies covered, 43 have never released any official information on the revenue forgone due to tax expenditures. Equally worrisome, the quality of existing reports is often strikingly poor, with 31 out of 39 reporting countries not providing data disaggregated at the provision level and 36 not disclosing the policy goal that each tax expenditure provision is supposed to pursue.
• Governments should also improve the evaluation framework for tax expenditures. Cost-benefit analyses and impact evaluations are vital to drive evidence-based reforms, and are strikingly rare. Even in the rare cases where these evaluations do exist, their results are often ignored, and ineffective measures are kept in place.
• Finally, overall accountability arrangements around tax expenditures should be enhanced by improving performance monitoring, introducing mandatory sunset clauses, publishing information on beneficiaries and promoting a broader and more inclusive debate for all tax expenditures.
Luisa Dressler* is an Economist at the Centre for Tax Policy and Administration, Organisation for Economic Co-operation and Development
Sanjeev Gupta is a Senior Policy Fellow at the Center for Global Development
Agustin Redonda is a Senior Fellow at the Council on Economic Policies
Paolo de Renzio is the 2021/22 Policy Fellow at the Center for Advanced Study in the Behavioral Sciences, Stanford University
*The opinions and arguments expressed herein are those of the authors and do not necessarily reflect the official views of the OECD or its member countries.
Join us for a virtual event on 20 April 2022 at 12 noon EST to discuss steps to better manage tax expenditures. Click here for more information and to register.
During the summer of 2020, the International Budget Partnership (IBP) and the International Centre for Tax and Development (ICTD) worked collaboratively to conduct a broad scan of civil society organizations (CSOs) working in the taxation space with a specific interest in domestic taxation. Our objective was to create a comprehensive picture of the emerging field, understand its general features, the challenges faced by CSOs and to provide a resource for others, including CSOs, governments and donor agencies. This scan coincided with the emergence of IBP’s Tax Equity Initiative, which “works to promote citizen engagement with budget policies and processes to make them more equitable and inclusive”. The ICTD has continued to deepen its work in this field, launching a Tax and Civil Society research programme earlier this year.
The global CSO scan
The CSO scan database presents 171 organizations working across 66 countries and 7 regions, and provides a comprehensive overview of what each organization does, the types of work they are engaged in, how they approach their work (theory of change), the types of taxes they focus on (both domestic and international), whether they are part of any international networks and lists their primary publications on tax from recent years.
Insights from the scan, complemented by findings from an online survey and in-depth interviews conducted with select organizations, are summarized in IBP’s new paper “Of Citizens and Taxes: A global scan of civil society work on taxation.” While the paper provides a comprehensive look at the characteristics of the organizations, this blog highlights trends from low- and middle-income countries and provides some ideas for how CSOs and others in this space can use the scan in their work.
International and regional networks
The CSO scan revealed that strong regional and international (both South-South and North-South) civil society coalitions exist in this space. Networks such as Tax Justice Network Africa, Latindadd and Tax and Fiscal Justice Asia have contributed to an environment in which civil society groups have been able to enter into tax work, receive support, and build capacity around issues of taxation, enabling greater engagement in international and domestic debates around tax policy, tax reforms, and tax administration. A few key findings emerge within each of the regions:
The Asian CSOs, compared to other organizations in the sample, are the most heterogeneous in terms of aims, ideologies and practice. This is unsurprising given the continent’s size and varying socioeconomic and cultural contexts. There is however noticeably less coordination and fewer networks and linkages between the listed organizations.
The sub-Saharan Africa sample is also diverse in terms of the type of work organizations are undertaking. Across the region, there is a general dependence on large aid bodies, charities, and state aid organizations with fewer fully independent or locally funded CSOs. While Asian CSOs tend to have links with trade unions and labor organizations, this is less apparent in sub-Saharan Africa. Nevertheless, there is a growing number of national-level CSOs increasingly involved in issues around domestic revenue mobilisation, likely due to encouragement from organizations like TJN-A, which has robust membership on the continent.
In the Middle East and North Africa, organizations tend to have a more consistent focus on domestic tax policy, civil society participation, and fiscal transparency. These issues are often addressed in connection with broader social issues such as democratic participation, civil rights, and gender disparities. The Arab NGO Network for Development (ANND) plays a central role by facilitating and publishing most of the research and reports produced in the region.
In Latin America, Latindadd is a crucial network and is an example of a pioneer in South-South cooperation, illustrated by its extensive collaborations with the Africa Forum and Network on Debt and Development. The existence of these networks is important as they provide a space for collaboration and sharing of best practices, especially given the relatively new tax policy practice arena in many lower-income countries.
What does this mean for civil society work going forward?
The CSO scan is a useful tool for organizations in lower-income countries, which are becoming increasingly prominent in the taxation space, thanks largely to the work done by regional and international networks. The work that for example Latindadd is undertaking to foster South-South cooperation can be facilitated through this scan. Organizations can search for partners within and across countries which are doing similar work and form linkages to either collaborate on mutual areas of interest or learn from each other. Where such linkages may exist at the regional level, not all CSOs in the scan are part of a network. This scan additionally provides an avenue for inter-regional learning amongst CSOs. The focus on domestic taxation is important, as this has largely been a neglected area of work in these regions.
For IBP and other large (I)NGOs, the scan can be used to scope out interesting CSO partners to support in countries of interest. It can also be used to connect existing in-country CSO partners (that for IBP, work on budget issues) to CSOs that are working on tax, specifically. Organizations like the ICTD can use the scan to align research work with policy interest areas. For example, the scan shows that many organizations are interested in – and work on – tax expenditures, but evidence on their effectiveness as policy tools is scant at best. Accordingly, there is scope for research on the impacts of tax expenditures that might help both civil society and governments do a better job at identifying policy priorities and targeting interventions. There are also some regional gaps in CSO activity, the key one being in Asia, and this is an opportunity for donors, international NGOs, and large regional CSOs to foster and support more tax work in this area. These actors can also play a role in addressing CSO constraints, particularly in funding and capacity (technical and human resources) which would go a long way in shifting the locus of influence and power from regional networks to national and grassroots CSOs.
While the CSO scan tells us a lot about what the field broadly looks like at the present moment, there are large opportunities for future research and work. In exploring these new avenues, the ICTD and IBP intend to continue collaborating and engaging with each other to support CSO capacity building and research targeting key topics and capabilities. These include topics such as: the effectiveness of CSO engagement in tax policy-making; how broad popular support can be encouraged for progressive tax policy agendas; or even what the impact of Covid-19 has been on progressive tax policy advocacy.
*Ruvimbo Chidziva is pursuing a master’s degree from the Munk School of Global Affairs and Public Policy at the University of Toronto and is a Research Assistant at the International Centre for Tax and Development. Fariya Mohuiddin is a Senior Program Officer for the Tax Equity Program at the International Budget Partnership.
This blog was co-authored with the International Centre for Tax and Development (ICTD) and can be found on their website here.
On November 17-19, members of the Addis Tax Initiative (ATI) will gather virtually for their Global Assembly. The ATI was set up in 2015 at the Third International Conference on Financing for Development in Addis Ababa, Ethiopia, as a multi-stakeholder partnership that aims to enhance domestic revenue mobilization (DRM) in developing countries. Its members include donor countries interested in supporting tax reforms, developing country governments committed to enhancing revenue collection and improving tax administration systems, and supporting organizations, including multilateral organizations, regional tax administration bodies, private philanthropic foundations, and international civil society groups.
As of October 2020, IBP has formally joined the initiative as a supporting organization, as part of its efforts to strengthen the role of civil society in promoting more equitable taxation in developing countries. IBP’s own Tax Equity Initiative has started working in three areas: (a) creating a better knowledge base to build the field of CSO tax work; (b) fostering tax transparency and participation; and (c) supporting CSO engagement with domestic tax reforms in developing countries through training, technical assistance, peer learning and more. ATI provides an important venue for discussion and coordination efforts in all of these areas.
We are honored to be formally joining the effort as the ATI adopts its new 2025 Declaration, which innovates and pushes the DRM agenda. It explicitly recognizes that it is not enough for governments to raise additional revenue, they need to do it in a more equitable way. Second, it supports the important role that “accountability stakeholders”—including legislators, the media, the public, and civil society groups—can and should play in ensuring that tax policy and administration are equitable and effective. It also highlights the importance of promoting transparency and accountability around tax expenditures, something that IBP has been working on through a regional project with a number of Latin American CSOs.
In coming years, we plan to contribute to ATI and its mission, bringing to bear our rich experience in working with civil society groups, governments and other actors in promoting more general reforms in budget policies and processes. We will support CSO tax work at country level, continuing our engagement on tax expenditures in Latin America and launching a new program to support civil society engagement with tax reforms in Africa. And we will work with the Global Initiative for Fiscal Transparency in promoting more transparency and citizen participation in tax policies and processes.
Most of our initial efforts, have focused on building a better knowledge base for the work that civil society organizations can do to promote more equitable taxation.
A few weeks ago, we published a comprehensive literature review of the political economy of domestic tax reforms, and a companion piece offering “reflection points,” or questions and suggestions for civic actors to consider as they plan work around tax reform.
Today, we are publishing the results of a global scan that aims to map, globally, civil society engagement with domestic taxation issues. This scan resulted in both a paper and an online dataset.
The dataset contains information on 171 civil society organizations working on domestic tax issues across 66 countries. It was populated mostly by drawing on IBP’s own partner network and the networks of other international NGOs such as Oxfam, Christian Aid, ActionAid International and the Global Alliance for Tax Justice. The dataset, based on information drawn from the websites of these organizations, describes broadly for each organization what types of tax issues they work on, what types of activities/work they are engaged in, a description of their approach, memberships in international or regional networks, and their main publications on tax from recent years.
The paper summarizes the key findings from the dataset, and goes a few steps further, drawing on results from an online survey and a series of in-depth interviews with well-established CSOs in this field, to provide a clearer picture of the main characteristics and challenges of CSO work on domestic taxation. In the paper, we identify key entry points for organizations entering this work and the key constraints that they face. It is a snapshot of the current moment in an evolving and expanding field, and by looking at where it is and where it has come from, we look at where it could move, and what needs to change to make that happen.
ATI members can use these publications in shaping their future work with civil society actors. By getting to know better what the field looks like, they can identify potential partners in the countries, regions and policy areas of their interest. And by recognizing how far CSO tax work has come in the past two decades, they can realize how important it is for ATI’s own mission, and support it in ways that address capacity constraints and strengthen the field.
In the coming weeks we will also be releasing the first set of in-depth case studies on how civic actors have engaged in tax policies, covering eight cases of CSO-led tax reform campaigns in Latin America, Africa and Asia. A synthesis of these cases, and short summaries of each, will be available soon. In addition to showing how CSOs can contribute to more effective and equitable taxation, this project will generate lessons for other civic actors interested in engaging with tax reforms.
We hope that ATI members—and many others interested in DRM and related areas—will benefit from these publications, and we invite everyone to engage in discussions and in action on how civil society can help promote more equitable taxation across the world.
Global discussions about domestic tax policy are increasingly dominated by one conceptual framework: tax as part of a “social contract,” or “fiscal social contract.” Moore, Prichard and Fjeldstad describe the rise of this idea in their 2018 book:
Arguments in favour of the expansion of taxation are often linked to a belief in the potential of such an expansion to contribute to state-building and increased government accountability. A particular narrative about these links has become relatively widespread in recent years…expansion of taxation may prompt processes of ‘tax bargaining’ and the construction of new ‘fiscal social contracts’ as tax payers resist taxation, make demands for reciprocity and enter into constructive interaction with governments. This narrative is grounded in the history of taxation and state-building in early modern Europe, but appears to be supported by the results of recent research in Africa and elsewhere in the developing world.
The notion of a contract also aligns well with the modern idea that effective taxation is not mainly about coercion, but must involve a considerable degree of quasi-voluntary compliance, where norms of behavior encourage taxpaying even when the risk of sanction is small. The motivating force for such compliance is that there is an underlying contract: I pay taxes in exchange for needed public services, so I do not need to be actively strong-armed.
As a framework that accurately describes the history of taxation, the social contract has much to commend it. For this reason, the concept has begun to appear in various fora as a desideratum of capacity building and advocacy around tax. For example, Oxfam describes their fiscal justice work as rooted in the social contract: “Tax systems, the budget cycle and public spending are the most visible and tangible expression of the social contract between citizens and state.”
Eric Broder Van Dyke / Shutterstock.com
We at the International Budget Partnership (IBP) also use the term regularly in our tax work. Even academic work, mainly focused on empirical assessments of how tax systems work, makes the case for social contracts as an end, not only an historical means. As the abstract of one article on tax in Nigeria states: “An important part of every country’s development process is the building of a social contract in which citizens pay tax and, in turn, receive public goods and services.”
But there are risks when we treat this positive concept (that is, a concept that describes how the world is) as a normative concept (that is, as a guide to how the world should be). Among the most important is that the central conceit of bargaining means that there is a direct link between what people are giving up in exchange for what they are getting. This ineluctably leads to the conclusion that those who have more to give can expect to receive more.
Understood in this way, a social contract approach does not appear to provide a solid foundation for progressive or redistributive taxation. If tax is about putting resources into the pot in exchange for services, poor and lower income groups with less to give are also not able to get very much out. At the same time, the rich can justify demanding policies that benefit them in exchange for their larger contributions. Some research suggests this is exactly what happens in modern states: states that tax lower income residents more tend to provide more social services, while those that rely more heavily on taxing the rich provide more property protection. New research also finds that in some contexts, poor citizens operating in the informal sector pay very little if any tax, which would seem to preclude them from participating in the “fiscal social contract.” Emphasizing a social contract approach to tax, then, seems to undercut the policy positions of many advocates for equitable taxation.
The surprising thing about this conclusion is that it is at odds with a powerful tradition in moral and political philosophy that emphasizes social contracts as a foundation for justice. Contract theory in political philosophy dates back to Thomas Hobbes and John Locke. They notoriously came to divergent conclusions about the nature of the contract, but their core idea, and indeed the core principle for all social contract theorists, is that the basis of a just system is consent of the governed to political institutions.
In the last century, contract theory was further developed by John Rawls in A Theory of Justice. Rawls used the social contract, and this same notion of consent, to derive highly egalitarian principles that justified significant redistribution. Other “contractualist” moral philosophers, such as T.M. Scanlon, have built on this framework, arguing that it provides special consideration for those who are worst off under any social arrangement.
Why does this Rawlsian social contract differ from the kind of bargaining that is at the heart of the modern tax framework? Why does it appear to invite progressive taxation while the “fiscal social contract” seems to undercut it?
The normative project that Rawls undertook with his social contract was not meant to describe the rise of modern states, as the “fiscal social contract” framework in tax scholarship is meant to do. The differences between these two ideas about social contracts emerge in the first instance from the use of the same term to describe both what is and what should be. History is dominated by “might makes right” bargains among powerful interests, but our vision of the world going forward is one in which the social contract should be based on ideas of equality and fairness.
This relates to the second and more important difference between these “contracts.” In the long tradition of moral and political philosophy that leads up to A Theory of Justice (and beyond), the social contract is not between citizens and the state. It is rather among citizens to create the state. In other words, the very nature of the contract is one between free persons in some “state of nature,” before the state exists, and not between an existing institution and “taxpayers.”
What we owe to each other as free persons is inherently a different matter from what we owe the state. In this conception of the social contract, the contract is truly social (between people) and the state is the executor of that contract.
This is a fundamental distinction. The principal question is one of collective action: what can we do together in what Rawls called a “fair system of cooperation” to live our lives well? It seems clear that this question cannot resolved by simply asking some form of free trade question: what will you give me if I give you X? We want to know instead what constraints we might put on our individual liberties in order to live together and prosper.
Because we are free and equal people coming together to make this decision, and because a social contract is something we consent to (otherwise it is not a contract), the terms must be such that they can be justified to everyone as fair and reasonable. Or, as Scanlon would put it, we must come to a set of principles that no one could reasonably reject. It follows that many people, and particularly those people who are less well off, will not reasonably give up any of their own rights or claims to others without something in return. As a pact between free and equal citizens in a moral sense (regardless of their power and influence in material terms), it lays the groundwork for straightforward bargaining, but also for redistributive claims that ensure a degree of equality in material terms. Redistribution is warranted by our moral duty to ensure that all enjoy at least the minimal material well-being necessary to be full participants in society.
In summary, there are two different sorts of object at play here that go by the same name. One is a positive construct that describes how states and citizens interact, characterizing this interplay as a bargain over access to resources. The other is a normative construct that describes how citizens should bargain with each other, and how they ought to create a society and state institutions to implement their agreements. The first of these is a useful guide to how the world is, but it is less useful as a frame for how we want the world to be. The second is more fertile ground for progressive taxation to take root.
What is to be done about this conceptual confusion? One possibility is that we refer to the “fiscal social contract” rather as a “state-citizen contract,” reserving the term “social contract” for the idea of a contract among members of the public. This might help. Perhaps a better option is to focus on two subsidiary concepts: “tax bargaining,” which is the central mechanism (e.g., tax for services) at work in the fiscal social contract, and “social justice” or “fiscal justice” which is the more relevant concept (e.g., agreeing to terms for fair cooperation) for the social contract.
Ultimately, advocates for fair and equitable taxation must construct a broader narrative around the social contract, one that spells out more clearly the social and normative commitments they have in mind: the social contract as a fair agreement among free and equal people that can be justified to all who pledge to uphold it. Only when we have made this position clear will we be able to build effective coalitions for tax justice that explicitly endorse redistribution through the tax system.
Even before the global pandemic, the international community was increasingly focused on domestic resource mobilization, as aid budgets were set to shrink while countries had affirmed ambitious targets in the Sustainable Development Goals. COVID has brought into even sharper relief the need to resource emergency responses and support aggregate demand. The fiscal costs of the current crisis require a mix of revenue sources, but ultimately will be paid for mainly with taxes.
Alongside the growing attention to taxation in general, interest in the role of civic actors in tax reform in low- and middle-income countries has also grown. This is due in part to a recognition that without a strong grass-roots voice in tax, some of the goals of progressive tax reform—such as equitable tax systems that are based on strong reciprocal ties between taxpayers and the state—may not be met. Civic actors have a vital role to play to ensure that tax systems are redistributive, and that tax compliance is part of a bargain in which citizens demand state performance and services in exchange. This is no easy task, as it means mobilizing the public to take on powerful interests that oppose progressive tax reform.
As part of IBP’s new Tax Equity Initiative, we have developed some resources to help civic actors deepen their engagement with tax reform and learn from each other. We spent most of 2020 working on three exciting new projects:
A review that explores lessons for civic actors from the academic literature on the politics of tax reform. This project resulted in two publications: an extensive literature review paper and a much shorter guide for civic actors to reflect on the main findings from the literature review. Both were released Friday, October 9.
A global scan of the civil society tax field, in which we catalogued the major civil society organizations around the globe that are working on tax, the topics they are working on, their main approaches and the constraints that they face, among other things. Products include a summary paper with a broad overview of our findings, as well as a searchable online database that will be available to everyone, which will be published in early November.
The first ever set of in-depth case studies on how civic actors have engaged in tax reform, covering seven cases of CSO-led tax reform campaigns in Latin America, Africa and Asia. A synthesis of these cases, and short summaries of each, will be available later this year. In addition to highlighting emerging findings from across the case studies, this project will generate lessons for other civic actors interested in engaging with tax reforms.
Taken together, we think these products will fill a gap in our understanding of how civic actors can and do engage in tax reform.
Our review of the academic literature on the politics of tax reform surveys the literature on the political economy of domestic tax reform, with a focus on low- and middle-income countries. The review looks at the main players involved in the politics of tax reform, the way in which the substance of tax reform shapes political forces, and the process by which taxes are eventually reformed, including how the reforms are framed and understood.
Tax reform is fundamentally political. It is about governments and the bargains that governments strike with taxpayers over how much will be paid and in exchange for what. Of course, states do not bargain with an undifferentiated mass of taxpayers, but with an array of interests, including powerful business interests, donors and creditors, civic actors and individual taxpayers that may or may not be organized. These actors may react to tax reform in different ways depending on their interests and perceptions, including their views not only about the taxes themselves, but what those taxes will be used for.
The literature review demonstrates that while states may generally seek revenue, and business and other elites generally seek to avoid shouldering the burden of paying tax, there are important divisions within these actors and groups. For example, ministries of finance may seek greater revenues to support expenditure, manage debt repayment, and ensure overall fiscal balance. But they may also promote foreign investment and other specific economic activities. This can lead to the pursuit of tax exemptions or tax treaties that reduce revenue, bringing ministries of finance into potential conflict with revenue authorities. Thus different parts of the state have divergent views on how much revenue to collect and how to use tax policy and administration to further their goals.
While business associations frequently oppose tax increases, they are also often divided over their interests. For example, formal sector business generally likes to see informal businesses enter into the tax net because they believe this leads to fairer competition. In Ghana, larger traders that were part of the Ghana Union of Traders’ Associations supported a turnover tax that brought smaller and more informal business into the tax net because it ensured fairer competition between these larger and smaller traders. Smaller firms may wish to see incentives or exemptions removed for larger firms for the same reason. These examples point to strategic opportunities for civic actors to exploit: opportunities to create alliances with state actors or powerful interests that may not typically be friendly to citizen agendas.
Tax reform is not only about fixed interests or incentives, but also about the way in which such reforms are structured and framed. Different ways of designing and talking about reform also matter. For example, when taxes are closely linked to popular expenditure programs, and when taxpayers trust the government to collect taxes fairly and use them for spending in the public interest, there may be more support for tax reform even from those who have to pay more. This suggests the importance of sound tax administration for tax policy: where there is high trust in tax authorities, there is likely to be more willingness to support progressive tax reform.
These points are just a taste of what is covered in the literature review paper. The shorter reflection paper is organized around guiding questions that civic actors can use to reflect on their strategies. We hope this is a useful starting point for supporting more and better civic engagement with tax, but we also want to hear from you! We know we are only beginning to scratch the surface of this exciting and dynamic field, and we want to keep improving the materials we are developing to make them more accurate, insightful and useful. So please: read and reflect, and also share your thoughts with us.
The Open Budgets Blog features content related to transparency, participation, and accountability in government budgeting; civil society budget analysis and advocacy; and public finance management.
Posts are the responsibility of their authors and do not necessarily represent the views of the International Budget Partnership, our donors, or partners.
The CSO scan revealed that strong regional and international (both South-South and North-South) civil society coalitions exist in this space. Networks such as Tax Justice Network Africa, Latindadd and Tax and Fiscal Justice Asia have contributed to an environment in which civil society groups have been able to enter into tax work, receive support, and build capacity around issues of taxation, enabling greater engagement in international and domestic debates around tax policy, tax reforms, and tax administration. A few key findings emerge within each of the regions:
We are honored to be formally joining the effort as the ATI adopts its new 2025 Declaration, which innovates and pushes the DRM agenda. It explicitly recognizes that it is not enough for governments to raise additional revenue, they need to do it in a more equitable way. Second, it supports the important role that “accountability stakeholders”—including legislators, the media, the public, and civil society groups—can and should play in ensuring that tax policy and administration are equitable and effective. It also highlights the importance of promoting transparency and accountability around tax expenditures, something that IBP has been working on through a 
As part of IBP’s new