The ICTD Government Revenue Dataset: Reshaping Tax and Development Research
Evidenced-based policy requires good research. And good research requires good data. When the ICTD was created in 2010, there was no one reliable, comprehensive and detailed source of statistics on how governments globally raise their revenues.
One of our first – and certainly most ambitious – project was to remedy that situation:
• To bring together and cross-check all the existing datasets to create one accurate, comprehensive and detailed series, covering the last 30 years, that would be a valuable new resource for tax researchers.
• To ensure that the dataset would become sustainable by finding another organisation that would continue our work, and take long term responsibility for updating and disseminating it.
• To influence and support leading international organisations, notably the IMF, to expand their efforts to collect government revenue data, and improve the transparency of those efforts.
The project has exceeded our high ambitions in every respect.
In 2010 there were a range of international sources of government revenue statistics. They suffered in varying degrees from missing data, significant errors and lack of transparency in the methods used in their construction. Most striking, few provided any of the information needed to clearly separate normal tax revenues from those revenues earned from the exploitation of oil, gas and mineral resources. This is a major concern for many developing countries.
The ICTD Government Revenue Dataset (GRD) set out to address these problems. It was constructed by (a) systematically cleaning and merging data from a variety of different sources, while eliminating errors, (b) more systematically distinguishing between ‘normal’ tax revenues and those accruing from the exploitation of non-renewable natural resource wealth, (c) using more consistent data on Gross Domestic Product in calculating tax ratios, and (d) more consistently organising statistics on revenues for centralised and federal states respectively.
After more than three years of work, the GRD was made available on open access, and given a high profile launch, in 2014 at the Center for Global Development in Washington DC. Key staff from the IMF, the OECD, the World Bank and the Inter-American Development Bank participated.
A snapshot of the online conversation about the GRD.
The GRD is now widely used by researchers, and widely viewed as the best source of data for tax and development research. It has provided the basis for a series of research projects focusing on new questions or, more interestingly, re-examining old questions with better data. Most strikingly, contrary to claims based on earlier research and data, there is no evidence that the receipt of aid consistently causes the governments of developing countries to reduce their own tax raising efforts. Research using the new data has similarly led to significant revision of earlier research linking taxation and elections, economic growth and democracy, among others. In March 2016, the World Institute of Development Economics Research in Helsinki, which is part of the United Nations University (UNU-WIDER), will host an international conference focused exclusively on research using the new GRD.
Sustainability and long-term impact
The ICTD has entered into an agreement for UNU-WIDER to host the GRD over the long-term, thus giving it a guarantee of future visibility, updating and further adoption. UNU-WIDER has expertise in data hosting, updating, publicity and visualisation. They also have a broad global network through which to further increase the reach of the dataset, especially in developing countries. The partnership is both a success for the dataset, and validation of the impact and importance of the work.
Influence on international organizations
In highlighting the limitations of existing international data sources on government revenues, we had a broader and more strategic objective: to encourage the collection, compiling, and sharing of higher quality data by international organisations. There has been good recent progress, in part attributable to ICTD efforts:
• Data transparency: One year after the launch of the GRD, the IMF made public for the first time the revenue data series that they use internally for research purposes.
• Attention to resource revenues: There is now broad recognition at the IMF and OECD that distinguishing natural resource revenues from other tax revenues is very important, with initiatives underway to do this systematically.
• Improvements in international sources: In recent years the OECD has accelerated efforts to collect revenue data for all countries, rather than exclusively for its own members. The IMF has invested in cleaning and improving their Government Finance Statistics dataset, correcting many of the issues identified in the GRD.