Post 2015: Global Action for an Inclusive and Sustainable Future

Box 7.1 Efforts to increase tax revenues in Côte d’Ivoire, Rwanda and Nepal
Côte d’Ivoire’s tax performance is outstanding.
Since the 1990s, tax receipts averaged 18% of
GDP while ODA amounted to less than 1% over
the same period. This is particularly remarkable
because the government managed to maintain
high levels of tax revenue throughout a decade
of political instability and conflict by making
deliberate efforts to promote the development
of the private sector and enhance the technical
capacity of tax administrations. It is doubtful
whether the government can further increase
tax revenues, since some calculations show that
the country already collects more taxes than can
be expected given its structural characteristics,
such as a large agricultural sector (OECD,
2011b, Grimm and Zhang, 2012). Moreover,
the country’s tax authority finds it difficult to
combat tax evasion, particularly by small firms,
which is thought to amount to CFA Francs 120
billion annually (approximately 1% of GDP).
Rwanda’s Revenue Authority has made
concerted efforts to bring small and medium
7.2.3 Taxation as a source of finance for
a post-2015 global framework
a country’s greater reliance on taxation as a
source of development finance is likely to mobilise
substantial resources, make development finance
more predictable, by increasing the diversity of
its development financing portfolio and expand
its policy space. Yet taxation is not a shortcut to
development. Success depends on political leaders
making a long-term commitment to widen the tax
base and to develop equitable and transparent fiscal
systems even when this means challenging powerful
political interests. the international context is
also critical. Developed countries could continue
to assist the revenue authorities in developing
enterprises (SMEs) into the tax net in order to
broaden the tax base, including setting up a Small
and Medium Taxpayers Office, a simplified tax
regime for SMEs and training for taxpayers.
Even so, in 2009 ODA accounted for about
49% of Rwanda’s budget (MINECOFIN, 2010).
Broadening the tax base is challenging, because
some tax exemptions are politically motivated
and the productive sectors are weak.
Weak productive sectors and politically
motivated tax exemptions are also problematic
in Nepal, further complicated by the decade of
political instability. As a result, ODA continues
to account for a substantial portion of the
government budget (18.5% on average from 2008
to 2011). Nepal could seek to bring more firms
into the tax net, but ultimately the broadening
of the tax base will depend on developing the
productive sector.
Sources: Côte d’Ivoire, Rwanda and Nepal case
studies
countries to improve their tax capacities and, in
line with the pcD agenda, increase international
cooperation to limit tax evasion by mncs and
wealthy individuals.
the heavy reliance on oDa to fund the mDGs
has been a source of criticism (peterson, 2010;
unctaD, 2007). placing development finance
on a more sustainable footing will depend in
part on the capacity of developing countries to
mobilise domestic resources and improve their
own financial systems. a solid financial sector is
essential to productive investment and is part of
widening the tax base. this is not to suggest that all
countries could provide all the development finance
poSt-2015: Global actIon For an IncluSIvE anD SuStaInablE FuturE
Taxation is not
a shortcut to
development.
Success depends
on political
leaders making
a long-term
commitment to
widen the tax base
and to develop
equitable and
transparent fiscal
systems.
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