Tax revenues provide governments with funds to invest in development, relieve poverty,
deliver public services and build the physical and social infrastructure for long-term
growth. Moreover, there are mutually beneficial links between taxation and good governance.
Tax and Development: Aid Modalities for Strengthening Tax Systems highlights how taxation
can have a positive effect on the quality of governance and a government’s relationship
with citizens and, in turn, how good governance can have a positive effect on compliance
and revenue mobilisation. How can international assistance providers, including OECD
members, international and regional organisations, support the development of tax
systems in developing countries? Tax and Development: Aid Modalities for Strengthening
Tax Systems provides practical guidance for policy makers and practitioners based
on the results of an extensive literature review, a survey of aid agency officials
and six country case studies (Ghana, Guatemala, Liberia, Mali, Mozambique, and Tanzania).
It examines the aid instruments that donors use to assist developing countries including
general and sector budget support, basket financing, stand-alone bilateral aid and
funding South-South organisations. The strengths and weaknesses of each modality for
supporting tax systems are identified, and some 50 recommendations to support the
development of effective, efficient and growth-oriented tax systems in developing
countries are provided.