by Alex Cobham

Systems of taxation can contribute to societies in three main areas: revenue, redistribution and (political) representation. Different countries exhibit differing relative urgency of needs in terms of these factors, and so it is of paramount importance to distinguish the primary goal when considering tax policy – but too often developing countries have been encouraged to follow standard prescriptions.

Low-income countries, notably in Sub-Saharan Africa and South Asia, are clearly short of revenues. In Latin America and the Caribbean, human development is restricted by massive inequalities. Oil-rich countries typically suffer from a deficit in political representation, as the tax channel is weakened.

OCGG Economy Analysis No 2 (PDF)