Donors, aid and taxation in developing countries—an overview

Donors, aid and taxation in developing countries—an overview

There is growing interest among development policymakers in taxation, both as a crucial source of revenue for development and because taxation is central to economic growth, redistribution and broader state-building and governance goals.

This paper explores the direct impact of donor supported tax reform efforts; the indirect impact of aid and related donor policies on domestic tax effort; the potentially perverse effects of tax-related conditionality; and the impact of broader donor policies including global tax arrangements. It makes detailed recommendations about future donor support for tax reform.

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