Tulane University
- A.b. Freedman School Of Business
- Administrator
- Affiliated Faculty
- Africa
- African Diaspora
- Africana Studies
- Afro Latinos
- Afro-caribbean Religion
- Afro-cuban
- Altman Program In International Studies & Business
- Amazon
- Ambassador Visit
- Center For Conflict And Cohesion Studies
- Center For Global Development
- Center For Global Education
- Center For Inter-american Policy And Research
- Central America
- Central American Policy
- Centro De Investigación Y Adiestramiento Político Administrativo
- Cepal
- Ceq
- Ceq Working Paper Series
- Chair In Economics
- Chavez
- Cipr
- Cipr And Iad Joint Seminar Series
- Cipr Post-doctoral Fellowship
- Ciprstaff
- Citizen Security
- City
- Colonialism
- Commitment To Equity
- Committee On World Food Security
- Communication
- Communications
- Community
- Cuban & Caribbean Studies
- Cuban-american Relations
- Cultural Rights
- Culture
- Culture And Community
- David Smilde
- Debt Crisis
- Declining Inequality
- Declining Inequality In Latin America
- Decompression
- Democrac
- Democracy
- Diplomat
- Disaster Relief
- Disaster Resilience Leadership Academy
- Discrimination
- Disposable Income
- Diversity
- Indigenous Latin American Languages
- Indigenous Rights
- Indirect Taxes
- Inequality
- Inflation
- Informal Urban Land Development
- Informal Urban Settlement
- Institutions
- Inter-american Court
- Inter-american Dialogue
- Inter-american Relations
- International Programs
- International Relations
- International Studies
- Intra-regional Trade
- Job Annoucement
- Job Announcement
- Job Opening
- Job Opportunity
- Journalism
- Judiciary
- K-12 Cuba Teacher Institute
- K-12 Teacher Workshop
- Kellogg Institute
- Music
- Natural Resources
- Neoliberal Policies
- Neoliberalism
- New Orleans
- New Orleans Center For The Gulf South
- Police Violence
- Policy
- Political Competition
- Political Economy
- Political Institutions
- Political Science
- Political Sociology
- Politicians
- Politics
- Politics Of Migration
- Popular Sector Incorporation
- Populism
- School Of Liberal Arts
- School Of Public Health & Tropical Medicine
- School Of Public Health And Tropical Medicine
- School Of Social Work
- Semester Abroad
- Sergio Bejar
- Speakers
- Staff
- State-society Relations
- Stone Center For Latin American Studies
- Student Funding
- Study Abroad
- (83) Politics
- (59) General Latin America
- (58) Venezuela
- (49) Political Science
- (47) Human Development
- (45) Commitment To Equity
- (24) Ceq Working Paper Series
- (21) Central America
- (21) Social Policy
- (19) Elections
- (17) Sociology
- (17) Costa Rica
- (17) Chile
- (16) Fiscal Policy
- (16) Political Economy
- (14) Latin American Legislative
- (14) Center For Inter-american Policy And Research
- (13) Future Of Cuba
- (9) Research
- (9) Stone Center For Latin American Studies
- (9) Ceq
- (8) Socialism
- (8) Cipr And Iad Joint Seminar Series
- (8) Anthropology
- (7) Fiscal Incidence
- (7) Core Faculty
- (7) International Relations
- (7) Environment
- (7) Literature
- (7) Income Redistribution
- (6) Spanish & Portuguese
- (6) Uruguay
- (6) Cuban & Caribbean Studies
- (6) Puerto Rico
- (6) Study Abroad
- (6) School Of Liberal Arts
- (6) New Wave
- (5) Declining Inequality
- (5) Cipr Post-doctoral Fellowship
- (5) Taxes
- (5) Southern Cone
- (5) Ciapa
- (5) Global Development
- (5) History
- (5) Policy
- (5) Social Justice
- (4) Center For Global Development
- (4) Redistribution
- (4) Undergraduate Students
- (4) Social Inclusion
- (4) Haiti
- (4) Dominican Republic
- (4) Populism
- (4) Guatemala
- (4) Ambassador Visit
- (4) Politics Of Migration
- (4) Hurricane Maria
- (4) Latin American Library
- (4) Imf
- (4) Econoimcs
- (4) China
- (3) Us-mexico Border
- (3) Tulane University
- (3) Education
- (3) Culture And Community
- (3) Neoliberalism
- (3) Declining Inequality In Latin America
- (3) A.b. Freedman School Of Business
- (3) Wacno
- (3) Globalization
- (3) Cooperative
- (3) Developing Democracies
- (3) Tulane
- (3) Cash Transfers
- (3) Voter Behavior
- (3) Extractivism
- (3) Labor
- (3) Environmental Studies
- (3) Violence
- (3) Graduate Conference
- (3) Inter-american Court
- (3) Coronavirus
- (2) Undergraduate Conference
- (2) Tucla
- (2) Social Equity
- (2) School Of Social Work
- (2) Social Inequalities
- (2) Migration
- (2) Tuscla
- (2) Reforms
- (2) Language
- (2) Comparative Politics
- (2) El Salvador
- (2) World Bank
- (2) Language And Culture
- (2) Public Policy
- (2) Police Violence
- (2) Ethno-racial Divide
- (2) Reading Project
- (2) Social Work
- (2) Award
- (2) Doctoral Program
- (2) Afro-caribbean Religion
- (2) Natural Resources
- (2) Oecd
- (2) Administrator
- (2) Job Announcement
- (2) Nora Lustig
- (2) Critical Race Theory
- (2) Public Opinion
- (2) Publications
- (2) Indigenous
- (2) Immigrants
- (2) Sergio Bejar
- (2) Mobility
- (2) Taxes And Transfers
- (2) Student Funding
- (2) Art
- (2) Nicaragua
- (2) Government Action
- (1) Central American Policy
- (1) K-12 Teacher Workshop
- (1) K-12 Cuba Teacher Institute
- (1) David Smilde
- (1) Graduate Students
- (1) Prison
- (1) Hurricane Katrina
- (1) Deportation
- (1) Study In Latin America
- (1) Government
- (1) Protests
- (1) Oil
- (1) Refugees
- (1) Social Mobilization
- (1) Social Justic
- (1) International Programs
- (1) Fundraising
- (1) Water Management
- (1) Forced Migration
- (1) Sustainability
- (1) Urban Ethnography
- (1) Lgbt
- (1) Kellogg Institute
- (1) Public Health
- (1) School Of Public Health And Tropical Medicine
- (1) Undergraduate
- (1) Diversity
- (1) Revolution
- (1) Tulaso
- (1) Greenleaf Fellow
- (1) New Orleans Center For The Gulf South
- (1) Latin Americanist Graduate Association
- (1) Lago
- (1) Lago Conference
- (1) Urbanism
- (1) Greenleaf Fellows
- (1) Slavery
- (1) International Studies
- (1) Outreach
- (1) Ethnography
- (1) Sustainable Development Goals
- (1) Catholic Church
- (1) Teacher Workshop; Outreach
- (1) French
- (1) Architecture
- (1) Indigenous Latin American Languages
- (1) Non-profit
- (1) Outrearch
- (1) Social Conflict
- (1) Audubon Zoo
- (1) Postcolonial Studies
- (1) Art History
- (1) African Diaspora
- (1) Middle American Research Institute
- (1) Job Opening
- (1) Center For Global Education
- (1) Relief
- (1) Disaster Resilience Leadership Academy
- (1) Trauma Institute
- (1) Cuban & Caribbean S
- (1) Mari
- (1) Authoritarianism
- (1) Gran Fiesta
- (1) Portuguese
- (1) Altman Program In International Studies & Business
- (1) Flas
- (1) New Orleans Film Festival
- (1) Democrac
- (1) Maduro
- (1) Elites
- (1) Africana Studies
- (1) Photography
- (1) Communications
- (1) Amazon
- (1) Identity
- (1) Graduate Student Conference
- (1) Community
- (1) Culture
- (1) City
- (1) Visiting Researcher
- (1) New York Times
- (1) Afro Latinos
- (1) Migrant
- (1) Migrant Workers
- (1) Peacekeeping
- (1) Paris
- (1) Hlpe Report
- (1) Venezuel
- (1) School Of Public Health & Tropical Medicine
- (1) Institutions
- (1) Rule Of Law
- (1) Benefit Incidence
- (1) Income
- (1) Hlpe
- (1) Urban Land Development
- (1) High Level Panel Of Experts
- (1) Nutrition
- (1) Committee On World Food Security
- (1) Food Security
- (1) Regional Agreements
- (1) Intra-regional Trade
- (1) Regionalism
- (1) Environmental Governance
- (1) Governance
- (1) Same Sex Marriage
- (1) Civil Society
- (1) Legislature
- (1) Transnational Activism
- (1) Effectiveness
- (1) Representation
- (1) State-society Relations
- (1) Informal Urban Land Development
- (1) Pension Reform
- (1) Forestry
- (1) Informal Urban Settlement
- (1) Legislatures
- (1) Transnational Law
- (1) Assembly Movements
- (1) Lasa 2010
- (1) Christian Science Monitor
- (1) Model Oas
- (1) Global Poverty
- (1) Global Economics
- (1) Roundtable
- (1) Meeting
- (1) Centro De Investigación Y Adiestramiento Político Administrativo
- (1) Political Competition
- (1) Celebracion Latina
- (1) Payson
- (1) Latino
- (1) Happiness
- (1) Debt Crisis
- (1) Film Series
- (1) Indigenous Rights
- (1) Ludovico Feoli
- (1) Fundación Vidanta
- (1) Buenos Aires
- (1) Teaching
- (1) Samuel P Huntington
- (1) Citizen Security
- (1) Prisons
- (1) Drug Trafficking
- (1) Anthony Pereira
- (1) Decompression
- (1) Inclusive Growth
- (1) Economic Forum
- (1) Fundación Rap
- (1) Transfers
- (1) Bolsa Familia
- (1) Mesoamerican
- (1) Poverty Reduction
- (1) Popular Sector Incorporation
- (1) Indirect Taxes
- (1) Semester Abroad
- (1) Fall
- (1) Music
- (1) Working Papers
- (1) Incidence Analysis
- (1) Repal
- (1) Public Sector
- (1) Inter-american Dialogue
- (1) Center For Conflict And Cohesion Studies
- (1) Social Dialogue
- (1) United Nations
- (1) Social Safeguards
- (1) Environmental Safguards
- (1) Private Sector
- (1) Spain
Tax To Finance The SDGs, But Not To Undermine Them
This blog post was jointly authored by Nora Lustig, Brahima Coulibaly, Ian Gary, Sanjeev Gupta, Warren Krafchik & Wilson Prichard
This week over 170 policymakers, government officials, and members of academia, civil society and international organizations will gather in Berlin to discuss the future of the Addis Tax Initiative (ATI). The overarching goal of the ATI is to improve domestic revenue mobilization (DRM) in order to finance the Sustainable Development Goals (SDGs). More than 55 countries, regional and international organisations have joined the ATI, which commits donors to collectively double their assistance to DRM, developing countries to step up their tax collection efforts, and all members to ensure “policy coherence for development.” However, noticeably absent from the ATI’s progress monitoring is the issue of equity. Indeed, analysis by Oxfam finds that only 7% of DRM support reported by ATI donors in 2017 contained clear goals related to equity or fairness in revenue systems.
The importance of equity
If the primary goal of DRM projects and reforms is simply to collect more revenue, this can have negative consequences for development efforts. For example, revenue targets (like collecting 15% of GDP in tax) can create perverse incentives to collect wherever it is most feasible- which can harm those without political power such as the poor or women the most. Tax and transfer systems in low and middle-income countries are, in general, far less effective than those in OECD countries at reducing poverty and inequality. In fact, research by the CEQ Institute shows that in 16 out of the 29 countries analyzed, taxes and direct transfers to the poor actually increased income poverty. Of course, part of that pattern reflects the inadequacy of social spending, but it equally reflects the need for a greater focus on the equity implications of tax reforms.
Priority areas for increasing equity in DRM
Given that in low and middle-income countries, taxes on consumption currently make up over 60% of revenues, there is a great deal of room for making tax systems more equitable at the national level. We suggest four priority areas for reform:
1. Strengthening taxation of income and wealth: OECD countries collect about 10% of GDP in personal income taxes, while non-OECD countries collect only slightly more than 2% of GDP on average. There is much developing countries can do to better tax professional incomes, increase the progressivity of income tax schedules, and tax inheritance and capital gains. When it comes to wealth, it remains largely undertaxed, despite a surge in ultra-high net worth individuals (especially in developing countries). An increasing amount of that wealth is being concentrated in real estate, yet property tax collection is similarly low. Non-OECD countries on average collect merely 0.5% of GDP from property taxes (compared to 2-3% in OECD countries). If low and middle-income countries as a group could reach 1.5%, this would be equivalent to an additional $28.9 billion in government coffers annually: more than total combined aid disbursed by Canada, France, Netherlands, Norway and Sweden in 2017.
2. Rationalizing the use of tax incentives: Tax incentives to attract investment can play a legitimate role in economic policy. Unfortunately, studies suggest that tax incentives in developing countries frequently continue to be characterized by excessive discretion, poor monitoring and little transparency. The result is reduced revenue and little new investment – in effect, a handout to corporations and wealthy interests. More transparent and accountable governance of tax incentives is needed.
3. Reducing the burden of consumption taxes and informal and nuisance taxes on the poor: While many assume that the poor do not pay much tax in low-income countries, they actually bear a heavy fiscal burden due to a wide array of consumption and informal taxes, small subnational taxes and levies, and formal and informal user fees to access essential services. In low and middle-income countries, consumption taxes make a significant proportion of the poor poorer than they were before taxes and transfers. Unless the poor can be sufficiently compensated with transfers, exemptions for basic foodstuffs and other essential goods may thus be necessary. Studies from Sierra Leone and the DRC suggest that total formal and informal burdens of direct taxes, levies and user fees make up as much as 10-20% of the incomes of poor households. Limiting these burdens should be given significantly greater priority.
4. Enhancing the participation of accountability stakeholders: Civil society organizations, academic institutions, women’s rights groups, and journalists have a critical role to play in monitoring and pressing for increased fairness in tax systems, voicing the concerns of the vulnerable, and advocating for the translation of tax revenues into public benefits. Nevertheless, in 2017, only 7% of DRM aid (reported to ATI) supported these actors.
Parallel action is also needed at the global level to make the ATI’s third commitment to “policy coherence” a reality:
1. Reforming the international tax system: While the BEPS Action Plan was a useful first step in trying to combat aggressive tax avoidance, it is not enough. Low-income countries continue to be disadvantaged by restrictive tax treaties and often still have little voice in global decisions that impact their taxing rights. All countries should be given the opportunity to raise their voice in the BEPS 2.0 negotiations, even if they are not members of the OECD Inclusive Framework – a situation that pertains to half of ATI partner countries. Meanwhile, existing international rules continue to be difficult to implement in lower-income countries, which are substantially more dependent on corporate tax revenues than OECD countries. A continued push for developing country taxing rights and priorities, including simplified approaches to enforcement, is needed.
2. Increasing cooperation on tackling offshore tax avoidance and evasion by wealthy individuals: It is estimated that Africans hold $500 billion in financial wealth alone offshore, which results in governments losing around $15 billion per year in unpaid taxes. Progress must be made to include developing countries effectively in automatic exchange of information processes and ensure effective collaboration in cases of tax evasion, while strengthening rules on beneficial ownership.
3. Continuing external support: In low-income countries, even the most substantial improvements in DRM will not generate enough revenue to finance adequate social protection and human development floors. External support such as aid will therefore remain critically important in pursuing equity at the global level.
Prioritizing equity in the ATI agenda
The theme of this week’s conference is “Towards a Roadmap for the ATI post-2020.” In drawing that roadmap, we are calling on ATI members to focus more explicitly on equity and inclusion. Along with the priorities outlined above, we propose that members of the ATI:
1. Adopt specific indicators on revenue composition in monitoring progress on Commitment 2, in order to prioritize not only collecting more revenue, but from more progressive sources, like direct taxes on income and property, rather than indirect taxes on consumption.
2. Regularly assess, under Commitment 3, tax spillovers and the distributional impact of tax policy reforms. ATI donor countries should conduct tax spillover analyses to ensure that their own corporate tax rules and practices, and tax treaties, are not undermining their DRM support. ATI partner countries should conduct distributional impact assessments in order to ensure the drive for more revenue does not come at the expense of achieving the SDGs, particularly on inequality and poverty.
3. Make a collective commitment to increase tax transparency. All government ATI members should commit to transparency on data about tax collection, tax policy decisions, administrative practices, and the amount of revenue raised from each type of source. In addition, all ATI members should commit to encouraging and facilitating the engagement of accountability stakeholders, and to support the effective representation of developing countries in international policy-making forums.
Rhiannon McCluskey (ICTD), Paolo de Renzio (IBP), Nathan Coplin (Oxfam) and Ludovico Feoli (CEQ) also contributed to this piece.
For more on this topic, read our brief: What Might an Agenda for Equitable Taxation Look Like?
RELATED
Ludovico Feoli
Permanent Researcher and CEO, CIAPA, Executive Director - Center for Inter-American Policy and Research at Tulane UniversityNora Lustig
Professor - Economics, Samuel Z. Stone Chair of Latin American Economics
LATEST SITE UPDATES
EVENTS
- A New Political Uprising: Perspectives on Haitian Current Events
- Criminal Leviathans: How Gangs Govern, Organize Crime, and Threaten the State from Behind Bars
- "The Cuban Economy: Performance, Problems, and Prospects" with Dr. Paolo Spadoni
- Canceled: "Brazil in the 21st Century" event with Dr. Idelber Avelar and Sergio Moro
- Perspectives on Latin America
- Spring Series: Now on Zoom
NEWS
- Research Group MEGA Held Virtual Workshop
- Tulane Sociology Professor Featured in Washington Post Op-Ed about Trump-Era Policy Impacts in Venezuela
- The CEQ Institute Entered Into A Fiscal Analysis Partnership With The Millennium Challenge Corporation
- Health Equity Network of the Americas
- CIPR Announces Inter-American Policy and Research Fellowship
- Challenges posed by the COVID-19 pandemic in the health of women, children, and adolescents in Latin America and the Caribbean
- 2020-2021 CIPR Post-Doctoral Fellows
- Catholic Church urges Venezuela to unite against coronavirus
- The new inequalities and people-to-people social protection
- What should Venezuela do about COVID-19? (in Spanish)
MEDIA
- Left Parties, Weak Courts, and Women Justices in Latin America
- Academia de Centroamérica: Consecuencias económicas y políticas del cambio de gobierno en los Estados Unidos
- Book Talk: Seeds of Power: Environmental Injustice and Genetically Modified Soybeans in Argentina
PEOPLE

Copyright © 2021 CIPR | Center For Inter-American Policy & Research All Rights Reserved.
Tulane University, 205 Richardson Building, New Orleans, LA 70118, (504) 862-3141 cipr@tulane.edu