While domestic resource mobilization hasn’t always received much attention in development finance discussions, the decline in official development assistance, or ODA, thrusts the issue into the spotlight — with taxes at the center.
“Tax is already the primary source of financing for lower-income countries, but as aid budgets continue to shrink, it will also increasingly be the linchpin of development finance,” Vanessa van den Boogaard, research fellow at the International Centre for Tax and Development, said at Devex Impact House on the sidelines of the World Bank and International Monetary Fund annual meetings. “We are firmly in the tax era of development, but we also know that there is a lot of work to be done.”
On average, low-income countries have a tax-to-gross-domestic-product, GDP, ratio of 15% or less, compared to about 40% in higher-income countries — a gap that sharply limits what their governments can do, she said.
About the author
Adva Saldinger@AdvaSal
Adva Saldinger is a Senior Reporter at Devex where she covers development finance, as well as U.S. foreign aid policy. Adva explores the role the private sector and private capital play in development and authors the weekly Devex Invested newsletter bringing the latest news on the role of business and finance in addressing global challenges. A journalist with more than 10 years of experience, she has worked at several newspapers in the U.S. and lived in both Ghana and South Africa.
