Tax, Welfare and Inequality

Image credit: © Johnny Miller, Goya Bauwens

Tax policy and tax administration can have a big impact on who does or does not pay their fair share, on economic incentives, and thus on levels of poverty and the distribution of income and welfare. Research under this theme focuses on developing a better understanding, in specific contexts, of the complex economic and political linkages between how governments tax, how their national economies perform, and how well their citizens live. Some of our specific concerns are: the taxation of high net worth individuals; efficient business taxation; and the taxation of socially-harmful activities like smoking tobacco.

Publications:

June 2018
What Might an Agenda for Equitable Taxation Look Like?
by Wilson Prichard

The notion of tax equity raises difficult questions. There is no single right definition of the term, and it is very hard to measure precisely the distributional effects of taxation and fiscal activities, especially in low-income countries. This brief seeks to clarify definitions, evidence and points of potential disagreement when it comes to tax equity, and puts forward eight key elements of a potential agenda for equitable taxation.

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Tax Unrest Among Market Traders : The Local Side of ActionAid´s International Tax Justice Campaign in Nigeria
by Kas Sempere

Tax justice has become a popular concept, and a number of international tax justice campaigns have exposed aspects such as the unfairness of tax havens and harmful tax breaks. Yet, the idea of tax justice at the local level is less well-known. The impact of campaigns to end tax havens and harmful tax competition may…

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Tax in Development: Towards a Strategic Aid Approach
by Olav Lundstøl

Raising a higher share of the value added in an economy for the public purpose is associated with state building, modern economic growth and development. From 2002-3 to date, low- and lower-middle income countries raised total tax and non-tax revenue from 11-12 per cent and 18-19 per cent of GDP up to 17-18 per cent…

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February 2018
Taxing High Net Worth Individuals: Lessons from the Uganda Revenue Authority’s Experience
by Jalia Kangave, Susan Nakato, Ronald Waiswa, Milly. I. Nalukwago & Patrick Lumala Zzimbe

This brief examines the experience of Uganda in increasing tax compliance from wealthy individuals, compares its approach to that of other countries’ tax authorities, and draws lessons that they can learn from each other.

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January 2018
What Can We Learn from the Uganda Revenue Authority’s Approach to Taxing High Net Worth Individuals?
by Jalia Kangave, Susan Nakato, Ronald Waiswa, Milly Nalukwago & Patrick Lumala Zzimbe

This paper examines the experience of Uganda in increasing tax compliance from wealthy individuals, compares its approach to that of other countries’ tax authorities, and draws lessons that they can learn from each other.

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December 2016
Linking taxation and social protection: Evidence on redistribution and poverty reduction in Ethiopia
by Kalle Hirvonen, Giulia Mascagni & Keetie Roelen

The reduction of poverty, and more recently inequality, are pressing concerns in many low- and middle-income countries, not in the least as a result of the Sustainable Development Goals committing countries to significant improvements by 2030. Redistribution is important for reaching these goals, and is shaped by countries’ tax and welfare systems. Despite redistribution resulting…

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September 2016
Taxation and inequality in developing countries – Lessons from the recent experience of Latin America
by Bruno Martorano

This paper aims to advance understanding about the relationship between taxation and inequality in developing countries, focusing on the recent experience of Latin America. Although the tax system was regressive in the 1990s, tax changes promoted equality in the first decade of the 2000s. In particular, the increasing contribution of direct taxes with respect to…

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October 2016
Unlocking the Potential of Administrative Data in Africa: Tax Compliance and Progressivity in Rwanda
by Giulia Mascagni, Nara Monkam & Christopher Nell

This paper is the first in a series of three studies looking at tax compliance using administrative data from Rwanda. It discusses the use of administrative data for tax research – specifically anonymised taxpayers records, which have become increasingly available on the African continent. The paper starts by critically summarising the key advantages and disadvantages…

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May 2016
The Corporate Tax Burden in Ethiopia: Evidence from Anonymised Tax Returns
by Giulia Mascagni & Andualem Mengistu

This ICTD Research in Brief is a two-page summary of ICTD Working Paper 48 by Giulia Mascagni and Andualem Mengistu. This series is aimed at policy makers, tax administrators, fellow researchers and anyone else who is big on interest and short on time. This paper looks at the challenge faced by many low income countries of increasing tax revenue dramatically while minimising distortions…

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March 2016
The Corporate Tax Burden in Ethiopia: Evidence from Anonymised Tax Returns
by Giulia Mascagni & Andualem Mengistu

This paper computes and analyses the tax burden on Ethiopian corporations, measured by the average effective tax rate (ETR) on their profit. Our strongest result regards the relation between tax burdens and firm size. We find a statistically significant U-shaped relation between ETR and size. While small firms face the highest tax burden, the largest…

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Blogs:

May 2018
by Eric Zolt & Jason Oh

Interest in wealth taxes has spiked recently due to disclosures of tax-haven abuses by the ultra-wealthy (the Panama Papers in April 2016 and the Paradise Papers in November 2017) and new empirical work on rising wealth inequality in countries around the world. These developments have led many to consider comprehensive wealth taxes as a potential…

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April 2017
by Jalia Kangave

For the past twenty years, Maama Sula (let’s say) has run a small fast-food restaurant in a town called Wandegeya in Kampala, Uganda. She sources the bulk of her supplies from the women in the nearby market. Because her business is relatively well-established, she pays income taxes and Value Added Tax (VAT) to the central…

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February 2017
by Bill Savedoff

Last November, I got a birthday gift from the International Monetary Fund: my very own copy of “How to Design and Enforce Tobacco Excises?” I don’t blame you for missing it—it came out 5 days before the US election. I was quite pleased to see it. I’ve been asking for an IMF statement on tobacco…

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