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:

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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January 2016
Boosting Revenue Collection through Taxing High Net Worth Individuals: The Case of Uganda
by Jalia Kangave, Susan Nakato, Ronald Waiswa & Patrick Lumala Zzimbe

For over a decade Uganda’s tax-to-GDP ratio hovered between 12 per cent and 13 per cent, despite various amendments to tax laws and reforms in tax administration. Part of the low revenue contribution can be attributed to factors external to the Uganda Revenue Authority (URA), such as the structure of the economy – particularly the…

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February 2014
Taxation and Livelihoods: A Review of the Evidence from Fragile and Conflict-Affected Rural Areas
by Oliver Lough, Richard Mallett & Paul Harvey

We are pleased to present the sixth in our publication series, ICTD Research in Brief – two-pagesummaries of our working papers edited to capture the main policy messages and aimed at policy makers, tax administrators, fellow researchers and anyone else who is big on interest and short on time. We hope you enjoy it.   This issue investigates the neglected topic…

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Going Where the Money Is: Strategies for Taxing Economic Elites in Unequal Democracies
by Tasha Fairfield

How can policymakers circumvent obstacles to taxing economic elites? This question is critical for developing countries, especially in Latin America where strengthening tax capacity depends significantly on tapping under-taxed, highly-concentrated income and profits. Drawing on diverse literatures and extensive fieldwork, the paper identifies six strategies that facilitate enactment of modest tax increases by mobilizing popular…

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Blogs:

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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July 2016
by Rhiannon McCluskey

Last week, the Institute of Development Studies hosted its 50th anniversary conference titled “States, Markets and Society“.  As part of the conference, the ICTD hosted a panel on the theme of taxation and fiscal contracts in Africa. The panellists were ICTD’s research directors Wilson Prichard and Giulia Mascagni, our Capacity Building Manager Jalia Kangave, and…

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