Building Tax Capacity in Developing Countries

Abstract

The agenda for the Third International Conference on Financing for Development suggests there will be less focus on aid, and more on how developing countries can generate their own financial resources for development. Governments will be urged to tax more effectively, and donors will be called upon to help build capacity in developing country tax administrations. While there is considerable evidence that donor support can enhance tax capacity, success is not guaranteed. In order for such programmes to be effective, they will need to be responsive to local contexts, be designed to prioritise building trust, offer long-term mentoring, target the right range of institutions, and facilitate South-South collaboration.