Abstract:In this paper we argue that a more legitimate and responsive state is an essential factor for a more adequate level of tax effort in developing countries and high income countries. While at first glance giving such advice to poor countries seeking to increase their tax ratios may not seem more helpful than telling them to find oil, it is presumably more feasible for people to improve their governing institutions than to rearrange nature's bounty. Improving corruption, voice and accountability may not take longer nor be necessarily more difficult than changing the opportunities for tax handles and economic structure. The paper also shows that high income countries have also the potential of improving their tax performance through improving their institutions. The key contribution of this paper is to extend the conventional model of tax effort by showing that not only do supply factors matter, but that demand factors such as corruption, voice and accountability also determine tax effort to a significant extent.
Summary. -This paper reviews the central issues that arise in designing intergovernmental transfers and surveys the approaches adopted in a number of countries, with special emphasis on developing countries. Since circumstances and objectives differ from country to country, no simple, uniform pattern of transfers is universally appropriate but experience around the world makes it clear that if services are to be efficiently provided, transfers must be designed so that those receiving them have a clear mandate, adequate resources, sufficient flexibility to make decisions and are accountable for results. Ó
Value-added tax (VAT) dominates tax systems around the world. But should every country have a VAT? Is VAT always as good as it could be in economic, equity and administrative terms? In developing and transitional countries the answers to such questions are critical to stability, growth and development. VAT is a critical fiscal tool in most countries. But VAT can sometimes be better designed and almost always better administered. The key questions that must be answered in designing and implementing VAT are essentially the same in all countries. But different tax designs may best suit different countries facing different circumstances. This book reviews experiences with VATs around the world and assesses how the choice of particular design features may affect outcomes in particular contexts.
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