Domestic resource mobilisation presents a particular challenge for developing countries, which struggle to raise sufficient revenue to provide basic services, such as road infrastructure, healthcare, and public safety.
Research indicates that at least 15 percent of GDP in revenue is necessary to finance these basic services, but in almost 30 of the 75 poorest countries, tax revenues are below this 15 percent threshold.
Amid these findings, major international organisations have called on governments from around the world to strengthen and increase the effectiveness of their tax systems to generate the domestic resources needed to meet the Sustainable Development Goals (SDGs) and promote inclusive economic growth. The international organisations are International Monetary Fund (IMF), Organisation for Economic Co-operation and Development (OECD), United Nations (UN) and World Bank Group.
They noted that all countries need to pay greater attention to the spillovers from their tax policies and step up their support for stronger tax systems.
They made the call at a conference organized at UN headquarters by the Platform for Collaboration on Tax (PCT) which provided a unique opportunity to discuss the role of tax in ending poverty, protecting the planet and ensuring prosperity for all.
Governments and relevant stakeholders also need to continue to work together on establishing a fair and efficient system of international taxation, including efforts to fight tax evasion and tax avoidance.
During a three-day conference at UN headquarters on “Taxation and the SDGs”, ministers and deputy ministers of finance, tax authorities, and senior representatives from civil society, private sector, academia, regional and global organisations debated the key directions needed for tax policy and administration to meet the SDGs by 2030.
This rose includes: how to mobilise domestic resources for development; tax policies to support sustainable economic growth, investment and trade; the social dimensions of taxation (income and gender inequality, human development); as well as capacity development and international tax co-operation.
As an era of unprecedented international co-operation on tax is underway with the advent of initiatives like the Automatic Exchange of Information, the Base Erosion and Profit Shifting (BEPS) project, and the active engagement of the UN Tax Committee—all these initiatives create new opportunities for the enhanced participation of developing countries in international tax policy discussions and institutions, but also new challenges to fully realising the benefits of international co-operation on tax.
The conference aimed to provide guidance to countries and other stakeholders on how to better target tax efforts to achieve broader development goals. Insights from the conference helps inform and shape the future work of the PCT members and partners, including the IMF, OECD, UN and World Bank.
Iheanyi Nwachukwu
